Fraud Risk Assessment: HashOcean

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  • HashOcean
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  • Last modified: June 21, 2016
  • Legitimacy
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HashOcean ( went live in January 2015 and provides cloud mining services from the United States. 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: 14 (3 Warnings = 1 Flag)
Phantom Richesexclamation_warningAdvertising "Return on investment within 5 months".
Source Credibilityflag-iconClaims to have a long history (the profitability graph starts in October 2012), even though website was not created before January 2015 (no registration prior to this date).
Social Proofexclamation_warningReferral program awarding 5 percent commission.
Reciprocityexclamation_warningTrial for 15 KH/s "free and forever".
Guaranteed Returnthumb-up-iconN/A
High Return / Low Riskflag-iconExtremely high returns with an expected ROI of well over 20 percent per month.
Overly Consistent, Positive Returnsflag-iconDaily profitability is consistently high and does not change in line with the total network hashrate, difficulty, or exchange rate. For the entire history the maximum difference between the highest and lowest return per day is just 10 percent and seemingly mean reversing at around 0.0071 BTC per MH/s.
Downplaying Riskflag-iconHashOcean "guarantees you the full refund if you don’t like their service operation for any reasons"
Hardware Equipment
Public Mining Addressflag-iconNo
Pictures of Mining Equipmentflag-iconNone
Secretive or Complex Equipmentflag-iconThe website mentions HashOcean mines on Scrypt, and shows that 1 MH/s returns 0.0074 BTC per day (21-Jun-2016). At the same time, it can easily be established that 1 MH/s is simply unable to produce this amount. Casinocoin is currently the best Scrypt coin to mine, returning just 0.00012194 BTC per day. Since the total network hashrate of this coin is less than 2 GH/s, and HashOcean claims to have 400 GH/s, the actual number HashOcean could be mining per day will be even lower. Most of the hash power would have to be allocated to Litecoin (1.38 TH/s), which returns 0.00007608 BTC per day. HashOcean is thus mining almost 100 times more than what is mathematically possible. HashOcean does not explain how it does this.
Website Availablethumb-up-iconYes
Website Registration Detailsexclamation_warningRegistered January 2015, for a period of just one year.
Website Designflag-iconTerms of use not present.
Grammar on Websitethumb-up-iconGood
Payments Optionsexclamation_warningBitcoin only
Service Disruptions & Unbusinesslike Conductflag-iconMissing terms and conditions result in no legal basis for doing business. Also product prices have been as consistent as the returns, with no differences between now and March this year (provided by the Wayback Machine).
Contact Informationthumb-up-iconBoth an address and telephone number (+1 650-603-5816) are included.
Verified Addressflag-iconThe given address is:

199 Leidesdorff St. San Francisco, CA 94111

But Google maps shows a bar at this location, and the company doesn't have a business registration number either (see "Business Registration").
Verified Ownerflag-iconThe name of the owner could not be found. The website WHOIS information is hidden, and the company has no business registration (also see "Verified Address" and "Business Registration").
Business Registrationflag-iconThe company is located in California, United States. There is, however, no registered company with the name "HashOcean" in this state.
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.

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”.

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. A valid question would be why an organization would try to sell such a scheme instead of using it to get rich themselves.

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.

Downplaying Risks
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.

Public Mining Address
A cloud mining company must have a public cryptocurrency address in order to participate in the mining process. There is no reason for a legitimate company not to disclose this.

Pictures of Mining Equipment
Cloud Mining companies should be able to provide some pictures of the products they are selling besides any textual descriptions.

Secretive or Complex Equipment
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.

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.

  • Alexander Orlov

    Are there actual fraud reports anywhere? I purchased some mining power myself there and still get my payments (since a month). In case this turns out to be scam we can file a law-suit. Feel free to contact me in this case 🙂

    • I doubt a law-suit will be a possibility to any extend. I see they have provided an address now (199 Leidesdorff St. San Francisco, CA 94111), but the Californian company register is still empty, the phone zip codes don’t match the address, and if you check it on Google maps it actually shows you a bar. In short, they did a poor show patching up this obvious red flag.

      Note that payments aren’t a very helpful indicator (although non-payments may signal the end of a scam). Every Ponzi schemes starts by paying-out, otherwise it’ll be extremely short-lived. Hence it is not included in the reports.

      Anyway, I hope you didn’t invest more than you can afford to lose. My advise would be to cash out asap as it is a question when, and not if, this scam will collapse. Best of luck!

      • Alexander Orlov

        Well I actually checked it on Google Maps myself. This could be still a building with a bar and many company offices above. This is not uncommon? Still I started to cash out, I hope I’ll be out before BitCoin’s halving. I guess at this point the Ponzi scheme will implode. Still can you commit this kind of scam as an US company? I mean although the domain owner is masked — which is ok for privacy reasons — the domain owner cannot be an anonymous person? Also the BitCoin addresses that the payments went through are known. BitCoin itself is not anonymous but pseudonymous in which case the scammer would be identified when he tries to get fiat cash for his BTC?

        • Good point! If the scammer was dumb enough to use an exchange that has a KYC policy then he could get caught easily. But if he uses, for example, BTC-e you’re unlikely to identify him this way.

          Privacy protection on the website makes it difficult to use this route, and since there is no company registration either that means the State of California has no clue who owns HashOcean. So basically there are just dead ends on this one no matter how you approach it.

          The only interesting thing could the be phone number, which is a landline that seems to trace back to (a residential area in) Mountain View, California (the other side of the state). The better scammers cover this up with a mobile number.

          • Alexander Orlov

            I’ve called the phone line today and some weeks ago and got every time just a standard answer: no agent is available, we’ll call you later. But I have not got any call back (maybe because I am not from US). Also this phone number could belong to some of those “virtual office” companies that provide you with a virtual secretary for $9/month.

          • Helene_B

            Hash Ocean Refund

            the real refund address is 18ErbCe9JyhF2T7dup3nvAskmH1DLSL6Pr

            NOW, BE CAREFUL !!!

            1. you need to send money from the same wallet, that you entered as payout
            it is true, you can sen almost empty 0.00001000 transaction for them to verify your adress and to refund you, but like i said, in transaction you specify, mutch more than just your wallet.
            2. with transaction you specify the date and the amount of deposit
            for example:
            date of joining 4/23/2016
            sum of all deposit 12BTC (if less than 10BTC put 0 before number, like 09, 08, 01)
            the amount to send on 18ErbCe9JyhF2T7dup3nvAskmH1DLSL6Pr
            is 0.01423612 BTC
            explanation 0BTC, 01BTC cent, 4236 is the date 4/23/2016, 12is the sum of BTC deposit.
            if you deposit more the 99BTC just put 99 at the end, they will se the total amount of deposit, but
            if you deposit 1btc and put 99 at the end… do not do that.
            in 12-24 hours, you will be refunded, they need time to find you among over 700.000 deposit and users

            they are not scammer as you think they are. they ben realy badly hacked.

          • One interesting thing is hackers appear to have been able to get some actual info on the scammers, and were even offered 100 BTC to stop searching. This could also lead to some actual refunds as the scammers start feeling the heat. In the end, they won’t be able to return everyones money since they were running a Ponzi scheme all along. There simply isn’t enough money to pay back everyone. They would of course blame that on a “hack”, but that’s best left to the authorities.

          • chinky dennis

            why not visit the address..i wish i was in US

      • Rui Gama

        Where do you live? Zip codes and phones prefix haven’t match for years plus you can get a VoIP with a number anywhere in the country.

    • Marco

      So they have shutdown now. No payouts since several days. Is somebody filling a suit to track these scammers down?

      • Alexander Orlov

        You can be this somebody too 🙂 Look on Twitter there are some links for reporting this fraud.

        • John Maselli

          SO how do we go after these Fratsters I am out a nice sum of money since I invested three days before they imploded.

  • Rui Gama

    Interesting that one year after this report was written they are still paying lmao the writer also misses the point of mining alt coins and converting to BTC as they state on their site.

    • Well, payments, even for a longer period of time, aren’t a very useful indicator of a Ponzi scheme for example. Take Madoff, paid for years, still a Ponzi. It all depends on user growth and reinvestment rates in those cases. Hence this report is also not aimed at predicting when a scam will collapse, just if it will turn out to be a scam (and quite effective at doing so, so far).

      I do tend to see an increase in visitors before a scam collapses, typically reflecting a peak in user growth. Since HashOcean is the most visited report at the moment, it’s probably up next on the collapse-list.

      • Rui Gama

        You still missed the point of claiming they have been mining BTC with video cards lmao.

        • It doesn’t really get any better if they mine LTC with it instead. They mention Scrypt somewhere, but that algo has already ASICed. In fact, you can mine anything with a Radeon R9 280X if you like, it just won’t return a serious profit anywhere.

          • Rui Gama

            You need to add more zeros. It took me literally 5 minutes to find the Pakistani running hashocean using Google only.he has more business at the same address. My problem is don’t you attack a thief like bitmain and other equipment makers that have priced their products according to BTC price and diff leaving people with minor profits and useless equipment while laughing on their way to the bank.

          • Are you able to find and link an official business registration document? One problem is that HashOcean seems to lack such a document, making it impossible to verify the owner to any extend.

          • Rui Gama

            That is done by consulting the secretary of state site. Try the Nevada sos if nothing in california. Hashocean can be a dba that will not show on any search in particular if is an individual dba although he maybe required to register with the town or city. if they are registered in Nevada the address will be the lawyer local address.the guy I suspected being behind hashocean on a second look is just advertising to get referrals.

          • Rui Gama

            Well you were right. I never thought a scam could survive a year and a half. Yes I know professional scams can last for years, but professional and bitcoin doesn’t go hand in hand. I lost a couple of BTC from earlier profits elsewhere so I’m not crying. Got almost half of my investment there. I propose to the community a more proactive stance, like clicking on every one of their ads. I saw a new one just popped up yesterday – coincidence? – let’s click on all of their ads and call the isp where they are hosted

    • “It’s probably up next on the collapse-list” appears to be awfully accurate. Website just went offline less than a week later.

  • Ahmed Abdo

    here is a site looks like the old hashocean but they changed the logo and the colors only
    check it