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- Really Bad
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Bitcoin160 (bitcoin160.com) was launched in June 2016 providing Bitcoin investment services from the United Kingdom.The company’s legitimacy has been evaluated based on the items listed below. Every individual item has been checked for the presence of obvious red flags or warning signals. If these are present, an explanation detailing what triggered them has been included. A detailed description of the reasons to evaluate each of the included items can be found below the table.
|Total Flags: 13 (3 Warnings = 1 Flag)|
|Phantom Riches||Even the website's name, Bitcoin160, is all about the lure of phantom riches as the platform offers 160% return in just 40 days.|
|Source Credibility||An attempt to generate credibility is made by claiming the company employs a "team" of "experienced" and "skilled traders", although anything to back this up isn't provided|
|Social Proof||The company offers a staggering referal bonus up to 14%|
|Guaranteed Return||Bitcoin160 "guarantees 160% return within 40 days with a 4% daily dividend".|
|High Return / Low Risk||Investments will return a completely unsustainable rate of return of well over 1,000% per year.|
|Overly Consistent, Positive Returns||The company says it makes money trading Bitcoin, but the profits are perfectly steady (at a positive 4% per day) and thus completely unrelated to price movements.|
|Downplaying Risks||Risk isn't just being downplayed, it's non-existent according to the company (see Guaranteed Return).|
|Secretive or Complex Trading Strategy||Bitcoin160 only writes that it is using a "unique trading system". Unfortunately, merely claiming to have a magic money generator isn’t very convincing.|
|Website Registration Details||bitcoin160.com was registered June 1, 2016.|
|Website Design||The website looks good, but a closer look reveals the owner got lazy at the terms and copied a random set. For example, Active Allocator features the same terms.|
|Grammar on Website||Good|
|Payments Options||Various, but only payments methods that don't reveal anything about the recipient.|
|Service Disruptions & Unbusinesslike Conduct||The lack of original terms and conditions (see Website Design) result a limited legal basis for doing business.|
|Contact Information||The following contact information is provided:|
Address: Capital Office, 152-160 City Road,London, EC1V 2NX
|Verified Address||The company register confirms the address (see Contact Information), but this isn't very reliable information (see Business Registration). The location has not been visited, but it's unlikely someone of the company would be there. It's a virtual office location.|
|Verified Owner||The owner's name is said to be Alexia Sciplino. This leads to a real person in the UK, but not even remotely related to Bitcoin160.|
|Business Registration||The company is registered in the UK with company number 10364363 as of September 2016, but it should be noted that Companies House does not actively check addresses and names. Hence this registration doesn't hold any real value.|
|Financial Regulator Registration||Given that Bitcoin160 is an Investment Trust, it should be regulated by the Financial Conduct Authority (FCA). There is, however, no record of the company in the public register.|
Note that items with a warning instead of a flag indicate that these could occur at a legitimate company. For example, legitimate companies will normally try to persuade you into buying their products. Multiple warnings will, however, still trigger a flag. A description for the listed items is provided below. This list is meant to assist with identifying obvious scams, and therefore does not provide any guarantees that a company is truly legitimate.
The most common tactic used by fraudsters is called “phantom riches”. By dangling the prospect of wealth such as “big payoffs”, the scam artist tries to get you to stop thinking logically.
Using the fear of missing out, fraudsters create a false sense of urgency with statements such as “last chance” or “only so few available”. This causes people to agree hastily, before even having the opportunity to think about what they’re doing.
Persuasion is more likely when the source presents itself as being credible, expert and trustworthy. Common tactics used by scammers to make themselves look legitimate include using fake websites or hacked emails and pretending to be someone they are not. Alternatively, sources can also be external with claims such as “Warren Buffet has already invested in this”.
Fraudsters take advantage of herd behavior by creating the illusion of consensus or social proof that the investment is legitimate with claims that “everybody is already doing it”, or referral programs in which members encourage their friends and associates to invest as well. This automatically triggers something in the head that says: “if everybody [or someone from the inner circle] wants it, it must be good”.
A business is likely to receive far more of our trust when it provides a lot of free value, because of the rule of reciprocity which causes us to tend to feel obligated to return favors after people do favors for us
All investments carry some degree of risk, so a guaranteed profit is a clear red flag.
High Return / Low Risk
Like a guaranteed return, a high return / low risk investment opportunity also defies the common risk-return relationship. The best advice is an old one: “if it sounds too good to be true, it probably is”.
Overly Consistent, Positive Returns
Cryptocurrency markets are among the most volatile markets, hence the performance of any related product or service is also expected to fluctuate.
The fraudster will do anything to provide a false sense of security, such as presenting some form of external risk insurance for the investment. In reality, insurance is only seldom acquired and guarantees typically lack substance. Dummy companies are often used to act as the guarantor or insurer. Other actions may include misrepresenting, or even non-disclosure of risks involved.
Secretive or Complex Trading Strategy
Even in the world of cryptocurrencies one should be skeptical about special competitive advantages without any proper disclosure, or when the information is incomprehensible or incomplete. Too often only the positive elements are accentuated.
Considering the importance of domains and websites in the internet age, there is almost no reason for a legit company not to have one.
Website Registration Details
Very few scam websites survive longer than one year, so domains are generally registered for just one year unless otherwise required for the specific domain. For the same reason, websites created less than one year ago should be considered suspicious.
Amateurish, cluttered and disorganized websites can point to a scam as many scam sites use text and images from legit websites and other sources which may not work together very well.
Grammar on Website
Many scammers have limited English proficiency.
Even though cryptocurrency payment options are logical for a cryptocurrency company, it is also very convenient for scammers as the recipient essentially remains anonymous. The same goes for services such as Western Union and Moneygram. Hence a lack of alternative payment options should still be considered a warning signal.
Service Disruptions & Unbusinesslike Conduct
Especially Ponzi scheme promotors will encourage participants to “roll over” their investment. These schemes are not very fond of investors cashing out, which may lead to difficulties receiving payments and a non-responsive or difficult to reach customer service.
Legitimate companies have very little reason not to list their contact information.
First, you should never hand your hard-earned money over without knowing where it is going. Second, you should do a background check to avoid handing it to a known scammer. Be weary of people without an online identity. Scammers will typically try to hide their identity or conceal their true identity to avoid being easily discovered. Especially investment services are normally subject to strict regulatory oversight, so a registration should not be hard to find.
Audits certainly do not root out every instance of fraud, but auditors do have a responsibility to detect errors or fraud in the company’s financial statements.