- Mining City, a Philippine-based cloud mining project, has been labelled a Ponzi scheme by the Philippine Securities and Exchange Commission
- The scam is soliciting up to $12,600 per month for non-existent mining contracts
- Cloud mining has long been attractive to crypto conmen
Mining City has been highlighted as another in the plethora of Bitcoin cloud mining scams by the Philippine Securities and Exchange Commission (SEC). The agency last week highlighted the website as another example of the schemes where investors pay a monthly fee in anticipation of receiving a portion of monthly Bitcoin mining returns when in fact they are being paid out the fees from new entrants.
Mining City is a Typical Ponzi Scheme
The SEC posted the warning over Mining City late last week following “numerous reports and information gathered by the Commission”, stating that it is not registered with the commission and has no license to operate within the country.
In a familiar tale, Mining City claims to sell mining contracts for a monthly fee, asking customers to pay up to $12,600 per month, with their fees allegedly going on renting out Bitcoin mining equipment. The company then claims to mine Bitcoin with this new equipment and hands over a portion of the profits to investors.
Investors Get “Fake Profits”
However, while there are a number of legitimate Bitcoin cloud mining services out there, the sector has sadly attracted the attention of scammers. Mining City seems to be one of these, with the SEC alleging that the company operates as a Ponzi scheme, paying out older customers with the proceeds from newer ones:
…the said scheme employed by MINING CITY clearly shows indication of a possible Ponzi Scheme where monies from new investors are used in paying “fake profits” to prior investors and is designed mainly to favor its top recruiters and prior risk takers and is detrimental to subsequent members in case of scarcity of new investors.
The SEC has identified the perpetrators of the scam and has threatened them, along with anyone who acts in their interests, with severe penalties as they investigate the scam further, hoping to close it down before anyone else loses their investment.