Variations in Bitcoin High Yield Investment Program Scams

Discussion in 'Virtual Money Scams' started by arrana, Aug 18, 2015.

  1. arrana

    arrana Samurai

    The development of crypto currencies and other virtual money has lead to a rapid rise in online High Yield Investment Programs (HYIPs) and creation of HYIP scam variations such as Fake HYIPs and Fake HYIP Monitors.

    HYIPs are almost always pyramid schemes where investors are promised high yield returns in very short time on the money they invest. Many HYIPs promise repayment of 125% in three days or less! Sometimes the scammers will link their own online store or property to the HYIP scam to attract more investors.


    Early investors are paid by the money that later investors invest. Eventually there are not enough new investors to sustain the payment pyramid and the scheme collapses leaving many investors without the money owed to them.

    The use of anonymous money such as crypto currencies allow scammers running HYIP scams to create websites online without any physical address and to receive money or pay investors anonymously. No physical address and anonymous money transactions allow the scammers to keep the HYIP scheme generating longer, getting more investments, and then to disappear without a trace.

    HYIP Monitors are websites which track HYIPs and give ratings based on payment reputation, and information on when a particular HYIP began operating, what its investment ratio is, if there are any scam complaints against it, etc. Investors can use this information to make decisions on whether to invest in a particular HYIP.

    While all HYIPs operate as pyramid scams, an HYIP is not considered a scam until it ceases payment to any of its investors. But an online presence of an HYIP company rather than a physical address, no legitimate paperwork associated with the company (including names of the owners), and the use of an anonymous investment/payment system such as Bitcoin makes the scam lucrative for criminals. Also, because those using Bitcoin and other crypto currencies do so to remain anonymous themselves when they are victimized they are less likely to report it.

    Here are the new variations of HYIP scams that are being used because of crypto currencies and virtual money:

    Fake HYIP Companies
    It has been observed that some HYIP company websites are created primarily to mine personal information from investors and not for skimming profit from investors. These databases are then sold to hackers to hack into the investors’ digital wallets and steal their Bitcoins or other virtual money.

    One HYIP website suspected of mining personal information advises potential investors that it cannot pay Bitcoins into the investors cloud wallets - investors must have a digital wallet on one of their personal devices. Why? Because cloud security is very tight and is monitored. If a HYIP states on their website that they cannot deposit Bitcoin payments to cloud wallets then the HYIP is probably collecting personal data for resale to wallet hackers .

    Fake HYIP Monitors
    In theory, HYIP Monitors are supposed to help eliminate scams by tracking the reliability of the HYIP to pay its investors and provide accurate information to potential investors.

    There has been a noticeable increase in the number of HYIP Monitor websites and several of them are “fake”. Their purpose is not to monitor HYIPs but to “scam the HYIP scammers” by becoming accessories in the pyramid scam. Large amounts of money can be made by individuals running fake Monitors.

    How fake HYIP Monitors work using Bitcoin:
    1. Advertising and manipulating HYIP information.

    The fake Monitor charges the HYIP company to be listed on the Monitor website and then manipulates company information, often delaying reports of non payments to investors. For the HYIP scammer the more places his HYIP is advertised the more investors the HYIP gets in less time. For those running the HYIP Monitor advertising is a good source of revenue as well as “playing” the HYIPs. The anonymity of Bitcoin addresses allows fake Monitors to profit from scam HYIPs without the public being aware.

    2. “Playing” the HYIP.

    One of the benefits of running an HYIP Monitor is being able to track all the information of active HYIP companies at all times. Sometimes an HYIP Monitor will invest a small amount of Bitcoin to test on whether an HYIP is paying or not.

    As mentioned, early HYIP investors have more chance of having their investment returned with profit. So, by investing early and often with Bitcoin under several fake user accounts on just one HYIP advertising 125% return , someone running a fake Monitor could automatically double their investment in two weeks (in just one HYIP company!)

    If the HYIP scam begins to have trouble paying before the Monitor has calculated, the individual running the fake Monitor can just contact the HYIP and blackmail them into sending the Monitor his investments or the Monitor will immediately list the HYIP as a scam. HYIP owners using Bitcoin often flip payments from one Bitcoin address to another to create the illusion that there are many investors profiting from the HYIP. But in reality, the owners may be transferring payments between their own digital wallets.

    So fake HYIP Monitor websites can make money from two sources- advertising/manipulating a HYIP’s information and investing. Fake Monitor scams could be described as a combination of “pump and dump” scams and insider trading. A fake HYIP Monitor can be detected by comparing HYIP information at several HYIP Monitor sites.
     

Share This Page