GRAND RAPIDS, Mich. (WOOD) — A new twist on a classic scam is taking advantage of the boom in the online currency bitcoin.
“This is capitalizing on the moment, on the hot streak that bitcoin is on, and in this case using it to scam people out of their money,” John Masterson of the Better Business Bureau of Western Michigan said.
The BBB is sending out a warning about a Ponzi scheme-type offer that promises bitcoin returns that are too good to be true.
“If anything seems too good to be true, 99 percent of the time it is,” Masterson said.
INVESTED BITCOIN VANISHES
The scam works like this: Investors buy bitcoin and invest it with the website Wedgecoin.com. The website promises unbelievable returns. According to the website, a $10 investment will see a 130 percent return in just 24 hours and an investment of $1,500 or more will have a 300 percent return in just three hours.
Small investors would see the initial return, but larger investments would go unreturned, instead kept by the web-based scammers.
“They hook you with a little bit with the promise of more. You invest more and then it just disappears on you,” Masterson explained to Target 8.
The website claimed it was based in West Michigan. But the Holland address it listed is really home to the Stow Company, a custom closet company that doesn’t want anything to do with the crooked website.
Randy Tallman, executive vice president and chief operating officer of the Stow Company, provided Target 8 with this statement:
“The Stow Company has no association at all with the website wedgecoin.com or the individuals or entities behind the website. Immediately upon learning that the website was claiming our business address as its own, we reported the suspicious activity to the site’s web host in an attempt to have the website taken down. We are happy that the site has now been taken down and hope that anyone harmed by the site is made whole by those responsible for it.”
This isn’t the first time Stow has had to take action. Before Wedgecoin, a similar website called Stowcoin was using the company address and running the same scam on potential investors. The real Stow company got that website shut down last year.
While both websites are now gone, the scam continues. Target 8 found two other nearly identical sites claiming they’re based in the United Kingdom.
WHAT IS BITCOIN?
Bitcoin is a digital currency that was first introduced in 2009. Purchased and stored online, it can be bought and sold like an investment, or used as a currency for goods and services.
“Bitcoin is still kind of the wild west,” Masterson said.
The price of bitcoin has had dramatic fluctuations. In December 2017, it topped out at nearly $20,000 per bitcoin. In February, it dipped below $7,000 per bitcoin. Now, the price is around $9,000 per coin.
TRACKING THE MONEY
In a traditional scam, it is usually impossible for the victim to follow the money. But because bitcoin is decentralized, it allows everyone to watch the money move from account to account.
Investors in Wedgecoin sent their money to an online wallet, represented by a long combination of numbers and letters. Some of the money was paid out to other investors. However, much of it was moved to other digital wallets, eventually passing through an account linked to several other scams.
Online records show this account has moved more than $1 billion and still has more than $3 million on hand.
Despite being able to see the money, victims can’t see who is behind the accounts or where they are really located.
“This is a lot of consumer money that has been taken wrongfully, and somebody out there in cyberspace is gaining from it,” Masterson said.
The BBB wants investors to make sure they know who they are giving their money to. If you come across a scam, whether you have lost money or not, they recommend making a report to the Better Business Bureau Scam Tracker. The BBB uses the tracker to identify scams and warn the public.