Alleged Bitcoin Scam Leaves Millions Missing

First time accepted submitter OutOnARock writes Yahoo Finance is reporting on the latest Bitcoin scam, this time from Hong Kong. "Investors in a Hong Kong-based Bitcoin trading company fear they have fallen victim to a scam after it closed down, a lawmaker said Monday, adding losses could total HK$3 billion ($387 million). Leung Yiu-chung said his office recently received reports from dozens of investors in Hong Kong who paid a total of HK$40 million ($5.16 million) into the scheme run online by MyCoin, but the total loss may be vastly more. 'The number of cases is increasing. These two days I received calls about more than 30 cases. We estimate more than 3,000 people and HK$3 billion are involved,' he told AFP."

Comments

A Bitcoin scam? Impossible!

[Anonymous Coward]

Bitcoin by definition is a scam. You can't have a scam of a scam.

Why are you throwing your money away on BTC?

[Qzukk]

Invest in my scheme! Send me money and I'll send you slips of paper that say you own gold!

Re:Why are you throwing your money away on BTC?

[Ksevio]

Intriguing! And what will I be able to do with these slips of paper?

Re:Why are you throwing your money away on BTC?

[msauve]

Unlike gold, Bitcoin is lightweight and easily stored. Why would anyone investing in Bitcoin leave more than what they need for short term liquidity in the hands of a third party? Just store some copies (hardcopy, even) is a couple of safe locations (safe-deposit box, etc.). If one were to be stolen, one could use a different copy to send a payment to one's self, invalidating all other extant copies. The only risk is timing - finding out when the original is compromised and being able to move fast enough. Still, considerably safer and easier than storing currency or gold in the same safe location.

(not comment on the safety of Bitcoin value)

Re:Why are you throwing your money away on BTC?

[Guy From V]

You throw me the idol!

Re:Why are you throwing your money away on BTC?

[msauve]

Intriguing! And what will I be able to do with these slips of paper?

Mr. Whipple can answer your question.

Re:Why are you throwing your money away on BTC?

[gmhowell]

You throw me the idol!

Throw me the whip and I'll throw you the idol!

A fool and his money...

[ZorinLynx]

...as much as I try to build sympathy for these people, I just can't.

I mean, just reading about this not knowing what happened would make me think "Hmm this seems shady". I also don't think I'm an overly paranoid person by nature!

Re:A fool and his money...

[Anonymous Coward]

Very few overly paranoid people consider themselves to be overly paranoid.

Most people, however, are not nearly as paranoid as they should be.

Re:A fool and his money...

[BasilBrush]

A libertarian and his money...

Re:A fool and his money...

[gregsmac]

Why have you heard something?

Re:A fool and his money...

[GNious]

Why have you heard something?

Why? Probably because he has ears.

10% of all bitcoins

[Sowelu]

if I'm correctly reading the figured I'm finding online, there's about 14 million bitcoins in existence, worth just under 4 billion dollars.

10% of all bitcoins were just stolen, and don't we see a story like this just about once a year?

Once in a rare while I regret not getting into Bitcoins during their huge growth phase. Then I'm reminded of how often this happens and I'm glad I kept my money.

Re:10% of all bitcoins

[ArcadeMan]

If you had gotten Bitcoins very early, ten dollars could have made you a multimillionaire.

Re:10% of all bitcoins

[Ralph Wiggam]

If you had bought bitcoins a year ago, a million dollars could have made you a thousandaire.

Re:10% of all bitcoins

[Drethon]

From what I'm reading, most of the problems isn't with the bitcoins, it is with the people who say if you give us bitcoins we'll give you money and keep giving you money. I don't think I've heard of bitcoins being stolen from someone's own wallet.

Re:10% of all bitcoins

[Registered Coward v2]

If you had gotten Bitcoins very early, ten dollars could have made you a multimillionaire.

On paper. the problem is liquidity, i.e. where could you walk in with multimillions of Bitcoins and get dollars immediately in return, like you can with other currencies such as Euros, Pound Sterling, Yen, etc.

Re:10% of all bitcoins

[Registered Coward v2]

From what I'm reading, most of the problems isn't with the bitcoins, it is with the people who say if you give us bitcoins we'll give you money and keep giving you money. I don't think I've heard of bitcoins being stolen from someone's own wallet.

This adage proves the maxim that a sucker is born every minute. So someone promises you annual rates of return of 200 to 300% and you believe them. As my econ prof said, "The first thing you do when you find a $100 bill is ask Why me?" Anyone who could legitimately make that rate of return wouldn't need to find random suckers but quietly amassing their own fortune.

Re:10% of all bitcoins

[Sowelu]

A family friend made enough real cash money off of Bitcoins to afford a rather nice mortgage-free house and a ton of disposable money, but you're right, I highly doubt that it ever made it into multimillions. Never even thought about it that way.

Re:10% of all bitcoins

[Canth7]

It's 90% paper losses - certainly nothing like 10% of BTC just stolen. You deposit 100K HKD, they tell you that you now have 1M HKD in your account and then it turns out you invested in a ponzi scheme - did you lose 1M HKD? No, just the original 100K since the gains never happened. The press will always choose to not write a story accurately as long as it gets better headlines.

Re:10% of all bitcoins

[Anonymous Coward]

I work at one of the big banks, I have to renew training every year on US laws on banking, some that go back the 1930's.

Some of the laws are things like "don't give bank money to your friends", "don't give property to your family". Pretty much "don't steal other people's money".

Wow. What was going on in the 1920's and '30's? And HSBC (and all the big banks, really) is still committing major crimes as a bank in 2015.

So an unregulated currency certainly makes sense!

Re:10% of all bitcoins

[Sowelu]

Ah, good to know. I'd love to know how much BTC overall was actually deposited that vanished.

Re:10% of all bitcoins

[Anonymous Coward]

It is THE issue. Because they can't create more BTC beyond the number they planned on creating in the first place at some point it will hit a deflationary spiral where holding onto the BTC is more profitable than spending them. Assuming of course that people don't get scared away by scams before things follow their natural course.

One of the main reasons why few, if any, currencies are on the gold standard any more is that there's a finite amount of gold to be mined and when you're economy is growing fast enough, you wind up with the same problem where those dollars are worth more tomorrow than they are today. In the long term, deflationary expectations are a very bad thing as they kill economic activity as people make money by not using it.

The only way to counter that is to define the price of gold and prevent anybody else from trading in it, which doesn't work in a world where gold mines are located all over the world.

Re:10% of all bitcoins

[ArcadeMan]

Funny and yet somehow appropriate reply coming from Ralph Wiggam.

Re:10% of all bitcoins

[fuzzyfuzzyfungus]

Wallets get cracked fairly routinely; but (to the best of my knowledge) only by virtue of being stored on systems that are compromised by some other means. The bitcoin mechanism alone is pretty solid; but that means very little if you can get access to the wallet by attacking the user's system at some other level and then just reading them off the filesystem.

For whatever reason, whoever did the core work on bitcoins appears to have been pretty good; but the quality and competence of most of the surrounding activity and infrastructure are somewhere between 'crap' and 'are you sure that this isn't a parody?'

Re:10% of all bitcoins

[ArcadeMan]

You mean like the exchanges we have today? No need to sell everything at once. If he had paid fractions of a cent or even a few cents per Bitcoin, it means a lot of profit even if Bitcoin is down to 200 dollars.

You only need to sell 14 Bitcoins per day at 200 dollars and you're a millionaire within a year.

Re:10% of all bitcoins

[Anon-Admin]

LOL, I bought $300 in bitcoin @ $0.50 a coin. Some time ago I sold off some of my holdings and bought 12.5 acres of land.

Mine is not in the millions, hell it is not even a million right now. But I have a bunch of bitcoin stored for later. Maybe it will make it to the millions, maybe not. Any way you look at it, I won on this investment.

Re:10% of all bitcoins

[fuzzyfuzzyfungus]

The tricky bit is that being deflationary and being a useful medium of exchange are somewhat at odds with one another.

To be a useful exchange medium, it has to be fairly easy(and not too costly) to sell things in exchange for it and buy things in exchange for it, ideally with enough liquidity that you'll never experience inconvenience and low enough short and medium term value fluctuation that just carrying some around in case you want to buy something does not become a substantial risk.

If however, most of the interested parties are looking to squirrel it away under their mattresses and wait for deflation to make them rich, you'll have an easy enough time selling any bitcoins you already have; but the ease of obtaining more, and the price you'll pay to do so, will be heavily dominated by the speculative waiting for the stuff to become more valuable. If it becomes too prevalent, that sort of hoarding activity will simultaneously reduce the rate of deflation(since wallets held by amateurs, or actively used in risky connected environments, are the ones that get lost much more often than the ones being held in cold storage by specialists) and help ensure that while bitcoins may become rarer, they are less likely to become more valuable in the process: the world is full of stuff that is getting rarer over time(basically anything 'antique' or 'collectable'). Most of it is virtually worthless, outside of any scrap value or the relatively low buying power of enthusiasts of obscure PEZ dispensers or whatever. Without continued activity using bitcoins as an exchange medium, there is nothing preventing the world's entire supply from dwindling to the status of an obscure techie relic of the early 21st century, maybe worth a few hundred thousand(if the entire set is available, in good condition) to decorate some .com-made-good executive's living room.

Re:10% of all bitcoins

[Rich0]

For whatever reason, whoever did the core work on bitcoins appears to have been pretty good; but the quality and competence of most of the surrounding activity and infrastructure are somewhere between 'crap' and 'are you sure that this isn't a parody?'

Well, US dollar bills are fairly well designed from an anti-counterfeitting standpoint.

However, if somebody walks up to you in the park and says that if you hand him a $20 bill today and show up at the same place tomorrow he'll give you back a $100 bill, and you give him your money, then you've lost your money. At no point was the integrity of the currency compromised - only the idiocy of those who have it.

None of these scams really have anything to do with bitcoin per se. They have to do with stupid people giving other people their money.

Now, the advantage of bitcoin is that you can do this stuff without some bank being able to freeze your assets, and often it is easier to do in a semi-anonymous manner. However, for a scam of this size I suspect they know exactly who stole their money, and they just have to wait for the police to catch them.

Re:10% of all bitcoins

[Prune]

If you had gotten Bitcoins very early, ten dollars could have made you a multimillionaire.

In related and equally meaningful news, if you had gotten a lotto ticket at the The Corner Store at the Riverbend Plaza in Wasaga last Friday within a specific time range, a few dollars would have made you an $50-million-aire.

Re:10% of all bitcoins

[QilessQi]

I'd say it depends on precisely where those acres of land are. :-)

Re:10% of all bitcoins

[QilessQi]

assuming BC remains something that is stable and trusted

And that's a big assumption. As you probably know, it is possible for the supply of something to go steadily downward and for the value to fall as well -- all that has to happen is for demand to fall faster than supply. The more people mistrust Bitcoin and refuse to use it as a medium of exchange, the lower the value goes.

Re:10% of all bitcoins

[ArcadeMan]

Where can you buy 12.5 acres of land for 300$? And Anon-Admin says he sold "some" of his Bitcoins, so that's not even all of 300$.

Re:10% of all bitcoins

[ArcadeMan]

Lotto relies on pure chance and usually only has one jackpot winner.

Buying Bitcoins early in the game was equivalent to buying penny stocks.

Re:10% of all bitcoins

[nitehawk214]

Wow. What was going on in the 1920's and '30's? And HSBC (and all the big banks, really) is still committing major crimes as a bank in 2015.

Black Friday happened, then the Great Depression. Then banking regulation became a thing. If you work for a bank in the United States you really really should know about this stuff. I feel that people not knowing this is what caused the 2008 crash.

Re:10% of all bitcoins

[PRMan]

This is exactly the case. Bitcoin is cash. Whenever you see a story about a Bitcoin scam, replace the word Bitcoin with "cash".

Re:10% of all bitcoins

[tompaulco]

So someone promises you annual rates of return of 200 to 300% and you believe them.

Bitcoin, of course, very specifically goes out of their way to indicate that there is no such promise.

Re:10% of all bitcoins

[tompaulco]

Of course it is deflationary. If the government's lies are to be believed, inflation is about 3%, so a bitcoin should grow in value by 3% a year once fully mined. There should be any number of investments that outperform 3%, so people should use it like a currency.
Of course, this flies in the face of inflationary currencies like the USD, where the philosophy is by all means spend it right now before it becomes worthless.

Re:10% of all bitcoins

[Troed]

Of course they would have, and did. There's enough liquidity going through Bitcoin exchanges every day for millions of dollars to go in/out of BTC.

A few years ago a co-worker and I had dinner, and since he was curious about Bitcoin I offered to pay my part of the dinner to him in BTC. That amounted to 10 BTC at the then-exchange rate of $4/BTC.

He sold them at $1000 each.

Re:10% of all bitcoins

[Registered Coward v2]

So someone promises you annual rates of return of 200 to 300% and you believe them.

Bitcoin, of course, very specifically goes out of their way to indicate that there is no such promise.

True. Bitcoin was just the new shiny in an old scam.

Re:10% of all bitcoins

[gnupun]

You don't understand investing. $300 worth bitcoins at $0.50/coin = 600 bitcoins. A bitcoin is worth $218 currently, so 600 bitcoins = 218 x 600 = $130,800. Not bad for a $300 investment.

Re:A Bitcoin scam? Impossible!

[BarbaraHudson]

Bitcoin by definition is a scam. You can't have a scam of a scam.

You've obviously never seen the movie "The Sting." :-)

Re:A Bitcoin scam? Impossible!

[Drethon]

Bitcoin is like regular bank accounts where most of the moeny is in virtual ones and zeros. Except regular banks have regulation and insurance with decades of history showing they work in most cases. Not to mention if a major bank tried to run away with everyone's money the lynch mob would be epic.

Re:A Bitcoin scam? Impossible!

[Anonymous Coward]

>Bitcoin is like regular bank accounts where most of the moeny is in virtual ones and zeros.

No. Nope. Not. Bitcoin is like a banking system without a bank, where your friends and relatives keep slips of paper saying (anonymously) who is owed what on a dollar bill by dollar bill basis. When you want to use your money, it becomes hard to get anyone to actually give you cash for it. People are trying to find ways to change a few of those slips of paper without you knowing.

The whole thing is a nightmare. These scams will continue until people get burned enough to walk away.

Amazing what the absence of govt really means

[Timmy D Programmer]

I think bitcoins are a great experiment in 'anarchy'. It goes to show that even a crappy government beats none at all.

Re:Amazing what the absence of govt really means

[digsbo]

Because there's no way a national government would allow its chartered monopolistic currency issuing bank to help commercial banks profit at the expense of taxpayers.

Re:Amazing what the absence of govt really means

[Perl-Pusher]

No lack of government here.

Enron:
"The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the de facto dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron was cited as the biggest audit failure" -- Wkipedia

MCI:
"fraud was accomplished primarily in two ways:

Booking "line costs" (interconnection expenses with other telecommunication companies) as capital expenditures on the balance sheet instead of expenses. Inflating revenues with bogus accounting entries from "corporate unallocated revenue accounts".

In 2002, a small team of internal auditors at WorldCom worked together, often at night and secretly, to investigate and reveal $3.8 billion worth of fraud." -- Wkipedia

Taylor,Bean & Whitaker:
"Taylor, Bean & Whitaker was a top-10 wholesale mortgage lending firm, the fifth-largest issuer of GNMA securities.
On August 5, 2009, following an FBI raid and suspension by the Federal Housing Administration from issuing FHA mortgage loans and Ginnie Mae mortgage-backed securities, it ceased business operations. In April 2011, its majority owner was convicted of 14 counts of securities, bank, and wire fraud and conspiracy to commit fraud, and sentenced to 30 years in federal prison.

Deutsche Bank and BNP Paribas have sued Bank of America, the trustee and collateral agent of Taylor Bean's Ocala subsidiary, over $1.75 billion in losses stemming from the subsidiary's fraud." -- Wkipedia

Bernie Madoff:
Bernard Lawrence "Bernie" Madoff (/medf/;[1] born April 29, 1938) is an American convicted of fraud and a former stockbroker, investment advisor, and financier. He is the former non-executive chairman of the NASDAQ stock market,[2] and the admitted operator of a Ponzi scheme that is considered to be the largest financial fraud in U.S. history. -- Wkipedia

Re:Amazing what the absence of govt really means

[gatfirls]

"Jumping out of the frying pan and into the burner" adequately describes your position.

Currency is at its basis is valued in confidence. By that measure bitcoin not very competitive with almost any currency in the world.

My dollar means nothing to me because it can't be counterfeited and/or anonymously transmitted. It matters because when I head to the dealership to buy a car the value doesn't go down by 40% while I am finishing the paperwork, and also because when I go to the bank to withdraw it they *can't* say "sorry we got hacked, follow our twitter feed for updates".

Re:Amazing what the absence of govt really means

[medv4380]

I'm pretty sure a bank could say that. It wouldn't be a bank much longer after that, and your new bank a-la the FDIC you'd at least have your insured money back. I don't believe anyone's had any significant loss of funds under the FDIC umbrella. Only a few days separated from your cash as they part out the failed bank.

Re:Amazing what the absence of govt really means

[firewrought]

I think bitcoins are a great experiment in 'anarchy'. It goes to show that even a crappy government beats none at all.

Perhaps you would like to see a list of what really, really crappy government gets you. In country after country, peoples' entire life savings were eradicated by government printing presses. In Weimar Germany, banknotes were best used as firewood.

Re:Amazing what the absence of govt really means

[gatfirls]

That was kind of my whole point. Sure a bank could literally say that but they wouldn't because the whole FDIC system is there to prevent the need.

There hasn't really been a banking hack to that scale but I'll bet anything they have mitigation plans in place to make sure it does not affect that confidence I spoke of above.

If one of these exchanges tried to operate openly and got insurance (if they could) then people would be a lot more secure because the insurer would make damn sure they are doing things as close to perfect as possible.

Re:Amazing what the absence of govt really means

[605dave]

Funny, in at least two examples you could make the argument that the fraud was caused but deregulation. In other words the government getting out of the business of playing referee to the market. Enron - deregulated energy markets in the 90s. TB&W - banking industry deregulated in the 2000s. And none of these examples show that government involvement was the cause. So I am not sure what your point is.

Re:Amazing what the absence of govt really means

[gatfirls]

It's a good thing bitcoin will be there to show people what the stability of a crypto currency looks like:

http://bitcoincharts.com/chart... .

Yup no one there lost anything, but I guess when the "free market" bends you over it's ok because.....

Re:Amazing what the absence of govt really means

[digsbo]

I don't believe anyone's had any significant loss of funds under the FDIC umbrella. Only a few days separated from your cash as they part out the failed bank.

Right, but under the Federal Reserve, the dollar has lost 97% of its purchasing power. Who gives a shit about the number in the bank account? It's the value.

Re:*scratches head*

[bill_mcgonigle]

How can they be missing? It's just digital data. Don't these bit-tards make backups?

Bit-tards don't make backups, or else they wouldn't be bit-tards. And then you have people who leave all their private keys online and people steal those and transfer the money away. And then you have people who run a Ponzi scheme and never had the funds in the first place, but shuttled the investments away and are living like kings in Patagonia.

Shadenfreude

[Anonymous Coward]

I think Bitcoin is one of the world's greatest producers of shadenfreude, but lately it's getting depressing. The cultist mentalities of a lot of them, and their incessant preaching towards their children and loved-ones has gone well beyond obsessed into cult status. The more I read bitcoin stories, the more depressed I get - not for the idiot that blew away all their money, but for the kids getting bitcoin IOUs for gifts, and the wives who are getting their shared vacation savings cashed in to buy more btc.

Re:Shadenfreude

[fuzzyfuzzyfungus]

Ah, that's your problem. Any external event can produce misery in others; but only you can turn exogenous misery into rich, heady, Schadenfreude by reveling in that exogenous misery. I suspect that some fragment of human decency may have acted as a sensitizing agent and reduced your Schadenfreude conversion efficiency.

The standard of care in these situations is a period of intensive inpatient work in marketing or public relations. Efficacy is excellent, with most patients showing increased conversion efficiency and a marked increase in enthusiasm for exposure to the most titillating varieties of exogenous suffering available; but there are some who contend that 'the cure is worse than the disease' or 'good god, man, what have you done?'.

Re:Shadenfreude

[PRMan]

So, anything the press tells you is a negative you believe without question. There are many, many positive bitcoin developments, but you choose to read the mainstream media.

Re:Shadenfreude

[jbssm]

Yes you are right, Slashdot is obviously "the mainstream media".

Re:BitCoin's isn't a mature cryptocurrancy

[Ash-Fox]

The problem isn't with the technology in general so much as its infancy.

No, the problem is with the technology, it depends on trusting the person it's sending money to deliver something. That is a flaw quite clearly. Unlike other technologies that depend on other methods to deliver like laws that can be enforced, Bitcoin is designed to make this difficult.

Proof that there's too much money in the world

[JoeyRox]

From the aritcle:

"One investor said she spent HK$1.3 million in swap options for the virtual currency last September. She said salespersons had told her she would recoup her investment in four months and make around 200-300 percent profit in one year."

How does someone this stupid get hold of that much money?

Re:Proof that there's too much money in the world

[HornWumpus]

They inherit it.

HK$1.3 million is about $130,000 in real money.

Re:Proof that there's too much money in the world

[wvmarle]

Maybe they bought a flat in 2003 (end of the SARS period), and sold it recently. They'd have easily tripled their money in that period of time (the housing market has gone up by that much, and it still going up fast - Hong Kong property prices are currently between ridiculous and simply out of this world). If they bought a $2M flat in 2008, they could sell it for like $6M now. That'd be $4M cash profit in hand, plus whatever they have left after paying off the original mortgage. Or take out a new mortgage based on the current value, mortgage interests are around 3% with banks all too happy to sell you mortgages.

LMAO

[Pope]

Bitcoin: backed by math, er, I mean scammers!

This might be a dumb question...

[H0p313ss]

... or possibly flamebait.

Are the Bitcoin skeptics like me allowed to be smug yet?

Re:This might be a dumb question...

[TeknoHog]

Are the Bitcoin skeptics like me allowed to be smug yet?

As soon as you blame USD and Euro for old-fashioned scams.

Re:This might be a dumb question...

[Last Warrior]

I can think of at least a few "I told you so" that I owe to some friends who extolled the virtues of this made up currency.

Re:This might be a dumb question...

[Cafe Alpha]

I'm pretty sure that making money off of "hours of getting yiffed by random furries" would fall under prostitution rather than a ponzi scheme. But you'd lose your profits on drycleaning.

Re:A Bitcoin scam? Impossible!

[mlts]

With a bank, they could shut down, and the government would handle their losses, so I'd say a bank is a lot freer to do stuff.

However, BitCoin is a buzzword, similar to how "MP3" was in the early 2000s, where one could have something related, use that term and sell it, such as "MP3 headphones", "MP3 batteries", even an ordinary cassette tape (as opposed to the MP3 player shaped as a cassette which worked in car stereos) marked as "good enough to copy MP3 files to it."

Same with BitCoin. Do a pyramid scheme, stick the term "BitCoin" on it, sit back, rake in the dough. Even though it has -nothing- to do with the cryptocurrency at all, it is just the same type of scam as previously.

Satoshi Nakamoto needs your bitcoin support.

[BoRegardless]

Buy bitcoin, otherwise his stash will not grow in value.

Don't give your bitcoins to someone else!!

[dwheeler]

If you transfer bitcoins to some other organization, then THEY have the bitcoins, not you. If you just want to give money to someone else, there are easier ways to do that than by using bitcoin :-).

it seems to me that if you want to use bitcoins, then you should keep the bitcoins in YOUR OWN wallet and under your OWN control until you want to spend them. Don't hand your bitcoins to a so-called "bank", a "trading company", or anyone else unless you purpose is to GIVE THEM the money. I don't know how successful bitcoins will be in the long term, but if they succeed it will be because people seriously protect the bitcoins.

Re:Don't give your bitcoins to someone else!!

[Comrade Ogilvy]

Without bank-like entities with a hoard of bitcoins, there cannot be effective cross currency exchanges. Without exchanges there is very limited liquidity. Without liquidity, bitcoin will always vacillate wildly. A currency that vacillates wildly is a toy currency for the very wealthy to use for a bit of "pin money", something the 99% should avoid like the plague.

Re:Don't give your bitcoins to someone else!!

[jbssm]

I actually wonder what is the percentage of people with bitcoin that where able to "keep the bitcoins in THEIR OWN wallet and under THEIR OWN control" for more than a couple of months without getting hacked and the bitcoins stolen.

Re:Don't give your bitcoins to someone else!!

[wvmarle]

Not sure about this, but the SCMP (local HK news paper) reported about people sending cheques to this company. That's real money, not BTC, that they gave that company. Details are thin, but it seems that this company asked for payment for to-be-mined BTC. At least they were running a BTC mining operation as well.

Eve Online in real world

[abies]

I think that everybody who wants to play with bitcoins should first play a year or two of Eve Online. This can teach a lot about dangers of unregulated virtual currency at fraction of cost. From that point on you will approach all financial transactions with question "HOW they want to scam me?" rather than "Is there a chance it might be not as good as they promise? Naaah, somebody would say something if it is a scam."

Re:Eve Online in real world

[UnknownSoldier]

/Oblg.

"Those who cannot remember the past are condemned to repeat it."
-- Winston Churchill quoting George Santayana

Re:Eve Online in real world

[QilessQi]

Not only that, but remember the old adage: "Those who cannot remember the past are condemned to repeat it."

Re:Eve Online in real world

[Yakasha]

Damn I already posted else I'd give you your well-deserved +1 funny. :)

Re:A Bitcoin scam? Impossible!

[NotDrWho]

I was thinking the same thing. "Bitcoin scam" is redundant. It's kind of like saying "worthless Kardashian."

Re:BitCoin's isn't a mature cryptocurrancy

[Anon-Admin]

Have you ever heard of an Escrow? In not you should look it up, lord knows I got an escrow on my house. It did not release the funds tell the inspectors and I signed off that the house was built right.

Same applies to buying with bitcoin. Use an escrow and you get your goods, the seller gets there coin, and the escrow provider get a small amount for handling the deal.

Re:A Bitcoin scam? Impossible!

[Enigma2175]

It's more like a 419 scam. They are called 419 because that's the law that makes them *legal*.

The Wikipedia article seems to disagree with you:

'The number "419" refers to the article of the Nigerian Criminal Code dealing with fraud.'

Nothing about them being legal, in most countries fraud is fraud. Do you have a citation that such scams are legal in Nigeria (or elsewhere)?

Re:A Bitcoin scam? Impossible!

[dunkindave]

It's more like a 419 scam. They are called 419 because that's the law that makes them *legal*.

Hopefully that was a typo. It is called 419 because that is the section of Nigerian law that makes it illegal.

Re:BitCoin's isn't a mature cryptocurrancy

[Ash-Fox]

Have you ever heard of an Escrow?

Not supported in the Bitcoin protocol.

Use an escrow and you get your goods, the seller gets there coin, and the escrow provider get a small amount for handling the deal.

Again, you missed the fact that this is not supported by the Bitcoin protocol.

Re:A Bitcoin scam? Impossible!

[gatfirls]

Uhhh, no it's their broad statute that covers fraud:

"419. Any person who by any false pretence, and with intent to defraud, obtains from any other person anything capable of being stolen, or induces any other person to deliver to any person anything capable of being stolen, is guilty of a felony, and is liable to imprisonment for three years.
                                  If the thing is of the value of one thousand naira or upwards, he is liable to imprisonment for seven years.
                                  It is immaterial that the thing is obtained or its delivery is induced through the medium of a contract induced by the false pretence.
                                  The offender cannot be arrested without warrant unless found committing the offence
"

The parent to yours was spot on. The fraud associated with bitcoin et al; is no different than any other really. It's just the globalization of it and the semi-anonymity that makes it ripe for abuse. That's why the whole thing is so silly when people point out the lack or regulations and centralization as a benefit. It's the main neon sign drawback.

Re:A Bitcoin scam? Impossible!

[Frnknstn]

They are called 419 because that's the law that makes them *legal*.

The number "419" refers to the article of the Nigerian Criminal Code dealing with fraud. So, no, that does not make them legal.

Re:BitCoin's isn't a mature cryptocurrancy

[fuzzyfuzzyfungus]

In other news, neither 'true communism' nor 'true capitalism' have every actually been implemented, and are thus not failures, economically viable fusion power is no more than two decades away, and the second coming and the earthly kingdom of god are expected within the lifetime of those currently gathered, just as it has been for the past ~2000 years.

Re:BitCoin's isn't a mature cryptocurrancy

[Enigma2175]

The problem isn't with the technology in general so much as its infancy.

No, the problem is with the technology, it depends on trusting the person it's sending money to deliver something. That is a flaw quite clearly. Unlike other technologies that depend on other methods to deliver like laws that can be enforced, Bitcoin is designed to make this difficult.

I don't see how Bitcoin is different than cash in this regard. If you are purchasing something without escrow then you will always run the risk of the other party making off with your money/property. If this happens, they still broke the law no matter if you were paying in cash, Bitcoins or Triganic Pu. If you don't trust the party you are doing the deal with you should take steps to protect yourself, no matter the currency.

Re:BitCoin's isn't a mature cryptocurrancy

[Ash-Fox]

I don't see how Bitcoin is different than cash in this regard.

Bitcoin isn't cash though.

If you are purchasing something without escrow then you will always run the risk of the other party making off with your money/property.

Okay, I am at a shady VPN provider website right now, they want me to my bitcoins via Bitpay, how do I escrow?

If this happens, they still broke the law no matter if you were paying in cash, Bitcoins or Triganic Pu.

Breaking the law isn't really helpful. Smoking pot is illegal in the Netherlands, but it doesn't do much, does it?

If you don't trust the party you are doing the deal with you should take steps to protect yourself, no matter the currency.

I'm protected with my credit cards and bank accounts through the insurance provided on my account (it covers both and is included with my account type) and with the ability to charge back for transactions that are either fraudulent or did not deliver service. But Bitcoin doesn't seem to offer anything like this at all.

Re:A Bitcoin scam? Impossible!

[TsuruchiBrian]

What's ironic about all these bitcoin scams is that they rely on a technology that removes the need for a middleman (e.g. a bank) to make transactions, the scams always involve people leaving their money in a 3rd party bitcoin bank rather than in a personal bitcoin wallet.

It's like people have bought into the idea of putting their money in safes, but when the "neighborhood safe inspector" comes door to door asking for the combinations to their safes, they don't realize that the whole point of a safe is that you ware not supposed to tell other people the combination.

Re:A Bitcoin scam? Impossible!

[TsuruchiBrian]

Didn't the banks already run away with a bunch of money, and then just convinced legislators to bail them out? And I think only 1 person went to jail along with a few fines that were dwarfed by the profits they made? And to top it all off, nothing about our system has really even changed. Banks are still too big to fail. They have no incentive not to pull the same bullshit again.

Re:A Bitcoin scam? Impossible!

[AK Marc]

I remember when they first came out, the response was that the person in the US suffering a loss to someone in Nigeria committed fraud first (usually by signing an affadavit claiming money they know they have no claim to). And that the law didn't cover two fraudsters defrauding each other. I can't find anything on that now, though based on the wording of the law and the means of the scam, the person being defrauded comitted a violation of 419, so turning the other person in is a confession to fraud.

Re:BitCoin's isn't a mature cryptocurrancy

[Last Warrior]

"I have these really fancy beads here that are worth a lot. if you give me that thing you have that I need, ill give you these beads and I promise that the guy in that next village will agree with me that the beads are worth a lot. He may not want to change these beads for other types of currency but you can get whatever you want from him. I call these beads bit-coins.

its ok that these beads aren't made of gold or silver or anything that could otherwise be used to make anything.
its ok that the local government doesn't even really consider these valuable currency. Or that there are no laws to protect anyone who gets robbed of these beads."
see the difference?

Re:BitCoin's isn't a mature cryptocurrancy

[PRMan]

Bitcoin is basically digital cash.

Would you hand that VPN provider cash? If not, then you probably shouldn't be handing them bitcoins.

I don't understand what pot-smoking in the Netherlands has to do with anything.

Cash doesn't provide charge-back service either. Look, Bitcoin is just like cash again!

Re:BitCoin's isn't a mature cryptocurrancy

[Comrade Ogilvy]

The reason is it easy to pay a small fee for this escrow handling for things like houses is because we have reliable banks for the USD currency. Such a service would be a natural business for an bitcoin bank/exchange to be involved in. Unfortunately bitcoin exchanges seem to vaporize due to inside jobs. I am 99.99999999% certain that a title company that happens to be handling the escrow account working with the loan agent from my personal bank is not going to walk away with my money or will be able to stand behind statements about funds being on hand, because there are layers of law and protections. How assured to the customers of MtGox feel about this kind of thing?

Re:A Bitcoin scam? Impossible!

[Yakasha]

Or any Guy Ritchie movie.

Re:A Bitcoin scam? Impossible!

[Applehu Akbar]

Something's illegal in Nigeria?

Re:BitCoin's isn't a mature cryptocurrancy

[Ash-Fox]

Bitcoin is basically digital cash.

My bank account is digital cash. I can send my cash using bank transactions and debit card transactions digitally much like how Bitcoin can send funds digitally.

Would you hand that VPN provider cash?

Normally I wouldn't have an issue using my digital cash for such things. However my digital Bitcoin cash is another story.

If not, then you probably shouldn't be handing them bitcoins.

Then you should disagree with the Bitcoin escrow guys and convince them that is the appropriate approach directly instead of trying to convince me who is sold on this escrow system.

Cash doesn't provide charge-back service either.

My non-Bitcoin digital cash does.

Now, back to the real question, I will even drop the word 'shady' since you want to use that as a red herring to escape from the real question.

I am at a VPN provider website right now, they want me to pay my bitcoins via Bitpay, how do I escrow?

Re:BitCoin's isn't a mature cryptocurrancy

[Troed]

In what way is CHECKMULTISIG in the protocol not supporting escrow?

Re:A Bitcoin scam? Impossible!

[LordWabbit2]

And just get scammed in some other way
http://www.therichest.com/rich...

Re:BitCoin's isn't a mature cryptocurrancy

[Ash-Fox]

In what way is CHECKMULTISIG in the protocol not supporting escrow?

In the way that I am now trying to pay for a VPN, the site asks me to use Bitpay and I don't see the escrow button to make it work.

Re:A Bitcoin scam? Impossible!

[Drethon]

Yeah because no one's account went to 0 overnight. Not saying banks haven't done criminal stuff but it hasn't resulted in people losing everything. As a result, most people didn't really care.

Re:BitCoin's isn't a mature cryptocurrancy

[Troed]

That's something completely different to claiming that the Bitcoin protocol doesn't support it, which it does.

(It seems BitPay has multisig escrow-capable wallets but I don't think it's part of their PoS solution yet)

http://blog.bitpay.com/2014/09...

Re:BitCoin's isn't a mature cryptocurrancy

[Ash-Fox]

I'll stick to credit cards and the like.

Re:BitCoin's isn't a mature cryptocurrancy

[Troed]

That's your choice. I was just pointing out that contrary to your claim the Bitcoin protocol fully supports M-N transactions (which credit cards do not) and by using that functionality some really cool escrow solutions can be developed and deployed - without me having to trust a single merchant.

Re: BitCoin's isn't a mature cryptocurrancy

[Ash-Fox]

It's there but it isn't. My original point that this is a technology issue remains. Bitcoin is still immature. The fact Bitcoin has a function in the protocol but it isn't even implemented for use doesn't make things better. Nobody should be using Bitcoin right now, it's just a scammers paradise and it undermines Bitcoins use.

Re: BitCoin's isn't a mature cryptocurrancy

[Troed]

The functionality is available in the Bitcoin protocol. Your complaint is apparently about BitPay. It's like blaming RFC 5246 for an incomplete TLS implementation by Microsoft.

I have had no issues using Bitcoin for payments and didn't know there had been any (all the scams I've seen are about people storing their private keys with someone else).

Re: BitCoin's isn't a mature cryptocurrancy

[Ash-Fox]

Your complaint is apparently about BitPay

Not specifically, I have the same problem with other services that accept Bitcoin payments too. I'm just using one common example.

I have had no issues using Bitcoin for payments

I haven't had issues using Bitcoin for payments it self. The issues I have been having have been getting the service I paid for.

Inaccurate reporting

[Canth7]

Instead of the ridiculous $387m in losses, it looks like closer to $8.1m in losses, of which Bitcoin is only a marketing tool to make the Ponzi scheme more marketable. http://www.coindesk.com/mycoin... As always, reporters are more than happy to run any title that gets hits, regardless of how likely the situation meshes with the facts.