Fraud Risk Assessment: Cryptosynergy

Cryptosynergy
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  • Cryptosynergy
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  • Last modified: November 4, 2015
  • Legitimacy
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Cryptosynergy (cryptosynergy.com) was launched in August 2015 providing 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.

Persuasion
Total Flags: 14 (3 Warnings = 1 Flag)
Phantom Richesflag-iconIt is advertised that the company's mission is "helping ordinary people to profit in these extremely high-yielding markets without the risk of loss involved if trading on their own."
Scarcitythumb-up-iconN/A
Source Credibilityexclamation_warningThe website mentions the company works with "a team of experienced traders in the cryptocurrency and foreign currency markets" in order to build trust in the company's capabilities.
Social Proofexclamation_warningCryptosynergy has a 5 percent commission referral program, intended to get users to convince friends and relatives to invest as well.
Reciprocitythumb-up-iconN/A
Products
Guaranteed Returnflag-iconThe company explicitly offers "guaranteed returns".
High Return / Low Riskflag-iconCryptosynergy offers multiple investment plans with a return percentage of 5% or more. This translates to an already unrealistic and unsustainable rate of 1800% per annum. It should, however, be considered that payouts can be reinvested resulting in returns being paid on reinvested returns. Doing so reveals an annual return percentage of well beyond 5,000,000,000%, meaning that every invested $1 could, at least in theory, turn into $50 million in one years' time. Strangely, Cryptosynergy still claims it does "not make unbelievable promises of unrealistically high returns".
Overly Consistent, Positive Returnsflag-iconThe investment plans return a perfectly steady income percentage regardless of any external variable such as price movements.
External Risk Insurancethumb-up-iconN/A
Secretive or Complex Trading Strategyflag-iconCryptosynergy offers "stable" and "guaranteed" returns, but does not provide any information at all on how it intends to do so.
Service
Website Availablethumb-up-iconYes
Website Registration Detailsexclamation_warningRegistered August 12 2015, and will expire in 2016.
Website Designflag-iconThe website is nothing but a collection of stolen content. The terms are copied from elsewhere, while also images were randomly picked at an external source (see Verified Owner).
Grammar on Websiteexclamation_warningThe grammar may be fine, but this is mainly the result of most of the content being stolen (see Website Design).
Payments Optionsexclamation_warningMultiple, but all of them (e.g. Bitcoin, Payeer, OKPAY) leave the recipient with some anonymity.
Service Disruptions & Unbusinesslike Conductflag-iconThe lack of specific terms and conditions result in limited legal basis for doing business.
Contact Informationflag-iconOnly a phone number is listed, while the address is somewhat hidden (not featured on the website) although it can be looked up easily. The owner is probably hoping that nobody bothers to do so, as the address is clearly fake (see Verified Address).
Business
Verified Addressflag-iconThe official address is on:

79 CHARING CROSS ROAD
WC2H 0NE
LONDON
UNITED KINGDOM

This used to be the address of "Soho's favourite new gay bar" called Manbar. Right now, the building is still empty.
Verified Ownerflag-iconThe owner's name is said to be "DAVID WEBER", but this person has no online footprint and is likely as fake as the address (see Verified Address). Doing a reverse image search on the featured picture returns many results but not a "David Weber".
Business Registrationflag-iconCryptosynergy Limited is registered with company number 09768124, but false information has been used for this registration (see Verified Address). This is possible because the Companies House does not check application details.
Financial Regulator Registrationflag-iconNot found
Independent Auditsexclamation_warningNone

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.

Phantom Riches
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.

Scarcity
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.

Source Credibility
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”.

Social Proof
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”.

Reciprocity
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

Guaranteed Return
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.

External Risk Insurance
The fraudster may present some external risk insurance for the investment in order to add to its credibility. In reality, insurance is only seldom acquired and guarantees typically lack substance. Dummy companies are often used to act as the guarantor or insurer.

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.

Website Available
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.

Website Design
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.

Payments Options
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.

Contact Information
Legitimate companies have very little reason not to list their contact information.

Business Verification
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.

Independent Audits
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.