Fraud Risk Assessment: AvaBitcoin

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  • AvaBitcoin
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  • Last modified: December 7, 2017
  • Legitimacy
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AvaBitcoin ( was launched in November 2015 providing investment services from Costa Rica. 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.

Phantom Richesflag-icon"Just sit back and relax for a day and see how your Bitcoin balance is growing" is AvaBitcoin's main advertising slogan.
Source Credibilityexclamation_warningTo build trust in the company's capabilities it is said that it employs a "team of professionals".
Social Proofexclamation_warningAvaBitcoin has a 5 percent commission referral program, intended to get users to convince friends and relatives to invest as well.
Guaranteed Returnflag-iconThe investment offer includes a guaranteed rate of return.
High Return / Low Riskflag-iconWith plans starting at 0.10% per hour, users can make a compounded return of 2.4% per day. It also implies an annual return of more than 600,000% (guaranteed). In other words, based on these returns $1 would turn in $6,000 in one years' time. For the plan that offers 0.15% this would even mean it could turn $1 into $500,000 in just one year. The minimum investment for the latter plan is 100 BTC or about $38,000 at the moment. Based on the same rates this should yield $19 billion in one year according the product offer. Since it is a lifetime plan, the same rate would apply to the second year, resulting in a number that is equal to 500 times the national debt of the United States. This gives an idea how absurd these rates of return are, and also on how shortlived this scam will be.
Overly Consistent, Positive Returnsflag-iconThere are three available investment plans, all of which "offer a constant earning percentage" regardless of any external variable such as price volatility.
Downplaying Risksflag-iconApart from offering a guaranteed income, AvaBitcoin uses every available opportunity to explain why investing is safe. The FAQ states, among other things, that AvaBitcoin does not engage in "high risk techniques for any extended period of time and are trying to avoid them altogether to minimize risks" and that AvaBitcoin "creates a source of the passive income with a low risk level".
Secretive or Complex Trading Strategyflag-iconThere's a full page dedicated to describing how the company generates money, but this is extremely vague at best. The majority of profits comes from "trading" and "mining". The mining appears to be the main source of income, as it is mentioned that: "AvaBitcoin will mine the Bitcoin on your behalf". On the other hand, in the FAQ only trading of financial instuments is mentioned. Regardless of the contradiction, both descriptions do not provide any real details on what AvaBitcoin is doing.
Website Availablethumb-up-iconYes
Website Registration is a newly registered website, with its registration date on November 9, 2015.
Website Designflag-iconThe terms and conditions are largely identical to at least those on CopperTradePro. This looks like another scam company, but it is older than AvaBitcoin so at minimum it confirms that the terms and conditions on AvaBitcoin are mostly stolen content.
Grammar on Websitethumb-up-iconMany paragraphs include sloppy mistakes or even very poor sentences such as "AvaBitcoin profits comes from 4 different markets. Majority of the profit earn using trading Bitcoins and mining Bitcoins in our large known data centre in China and Costa Rica".
Payments Optionsexclamation_warningCryptocurrency only, leaving the recipient with sufficient anonymity.
Service Disruptions & Unbusinesslike Conductflag-iconThe lack of proper terms and conditions (see Website Design) result a limited legal basis for doing business.
Contact Informationflag-iconThe contact information is limited to an email address. A phone number or a physical has not been provided.
Verified Addressflag-iconThe company is actively hiding its address, as the website's registration information is privacy protected. The website itself only mentions Costa Rica as its official location (see Contact Information above), while failing to add any further detail. Furthermore, the claim of being registered in Costa Rica appears to be false (see Business Registration below).
Verified Ownerflag-iconThe owner could not be verified as a result of the same limitations listed above (Verified Address).
Business Registrationflag-icon"AvaBitcoin is an offshore company registered in the Republic of Costa Rica" as stated on the home page. However, when checking the national registry of Costa Rica no companies turn up when searching for "avabitcoin". In fact, just "bitcoin" yields no results either. Since "AvaBitcoin" is used as the legal name in the terms and conditions, the claim of being a registered company is a lie.
Financial Regulator Registrationflag-iconAvaBitcoin needs a business registration before it can register with a regulator, hence this registration is also missing (see Business Registration).
Independent Auditsexclamation_warningNone
Total Flags: 14 (3 Warnings = 1 Flag)

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.

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.

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.

Comments (3)

  1. Marie April 16, 2016
    • Digiconomist April 16, 2016
  2. Sherell Fraser December 7, 2019

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