Fraud Risk Assessment: My-Hash

My-Hash
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  • My-Hash
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  • Last modified: January 20, 2016
  • Legitimacy
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My-Hash (my-hash.com) was launched in October 2015 providing Bitcoin and altcoin cloud mining services. 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: 11 (3 Warnings = 1 Flag)
Phantom Richesthumb-up-iconN/A
Scarcitythumb-up-iconN/A
Source Credibilityexclamation_warningMy-hash builds legitimacy by stating that the company is run by "a team of mining experts ".
Social Proofflag-iconMy-Hash has referral program that offers up to a staggering 10% commission. It's typically this high for Ponzi schemes that survive on bringing in more users.
Reciprocitythumb-up-iconN/A
Products
Guaranteed Returnthumb-up-iconN/A
High Return / Low Riskflag-iconUsers can earn 6 times more than mathematically possible at My-Hash. The featured profitability also implies that an investment could be earned back within 4 months. This boils down to a compounded rate of return of 400% per year. This is extremely high and unsustainable by nature.
Overly Consistent, Positive Returnsthumb-up-iconN/A
External Risk Insurancethumb-up-iconN/A
Hardware Equipment
Public Mining Addressflag-iconNo
Pictures of Mining Equipmentexclamation_warningThe website features a webcam that is supposedly showing the mining equipment. The latter could not be confirmed based on the live view.
Secretive or Complex Equipmentflag-iconMy-Hash only mentions it uses "state of the art hardware", but fails to even describe the equipment in more detail.
Service
Website Availablethumb-up-iconYes
Website Registration Detailsexclamation_warningThe website was registered on October 24 2015, for a period of just one year. This is a newly registered website, with a short life expectancy.
Website Designflag-iconMy-hash put more effort into a promotional video than its website. Without it, the website would be a rather empty collection of font sizes and formats that don't work together very well. The worst part is that a terms of service is not even included. Without this, there is no legal basis for doing business.
Grammar on Websitethumb-up-iconThe my-hash websites lacks text, but the featured paragraphs are made up of proper English.
Payments Optionsexclamation_warningCryptocurrency only
Service Disruptions & Unbusinesslike Conductflag-iconThe lack of terms and conditions results in an absence of legal basis for doing business.
Contact Informationflag-iconAn address or telephone number is not included on the website. Even an email address is missing, as users have to use a message page in order to contact support.
Business
Verified Addressflag-iconThe address could not be determined due to a lack of information. The website registration details have been hidden (whois privacy protection).
Verified Ownerflag-iconThe owner could not be determined due to a lack of information. The website registration details have been hidden (whois privacy protection).
Business Registrationflag-iconAt the very least a country of origin is required to find a business registration, but even this could not be determined.
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. 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.

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.

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.