Back in 2014, Homero Joshua Garza founded GAW Miners – a company that allegedly specialized in designing, developing, and selling crypto mining hardware. However, only a year later the company was shut down for being a Ponzi scheme, which was later followed by a lawsuit just one year later. On the back of GAW Miners, Garza decided to create PayCoin and it was supposedly built by the developers from GAW Miners. Just the affiliation between the two sounds dodgy, but it managed to net Garza a tidy sum of cash. PayCoin was a cloud mining currency and was supposed to be built on the SHA-256 algorithm – the same algorithm behind Bitcoin.
After mis-selling the coin to investors through false promises, it too fell through and Garza was taken into custody. At his hearing, he was sentenced to 21 months behind bars instead of the original 20 years, but he also has to pay back investors $9.2 million in restitution. He will then have to spend six months on home detention – a worthy punishment of such a crypto scandal.
Crypto Scammers on Every Corner
Unfortunately, where there is good money to be made you will find scammers. However, in the cryptocurrency world it appears to be a little easier to fool people. There are a lot of people who invest in cryptos that don’t understand the technology behind it, they just like the idea and the problems the project appears to solve. For a few unfortunate individuals, they have fallen prey to a nice-looking website that offers high returns in a short space of time, which then turns out to be a scam. Other scams exist such, as the classic “Send 1.5 Eth to this address and you will receive 10 back.” If you can’t smell the scam a mile off then you should probably stay away from cryptos. Recently, an app on the Google Play Store scammed 100 users out of over $388,000 by posing as a new Google app.
Prime Minister in the Crosshairs
It appears as if nobody is safe when it comes to scammers impersonating them. The latest victim was Maltese Prime Minister Joseph Muscat. He is a well-known crypto-advocate and his government recently passed three crypto-friendly bills into law – making him the perfect target. The scammers created a fake Instagram account and it fooled a large number of Maltese citizens, as well as key members of parliament. The account promised to give away Ether if users contacted Wang Wei and sent him Ether. It is still unclear how many people fell for this scam, but this type of scam often nets thousands of dollars’ worth of cryptos.
Whatever the scam is, it will likely fool some people. The best way not to get scammed is to use common sense. Don’t click links in random emails from people, never send cryptos to an address that promises to give you more back, and never install software you can’t verify the source of. Scams are rife in the crypto world, so stay safe to keep your cryptos.