Fraud Risk Assessment: BitscoinsDouble

BitcoinsDouble
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  • BitcoinsDouble
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  • Last modified: December 7, 2017
  • Legitimacy
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BitcoinsDouble (btc2x.com) was launched in December 2015 providing Bitcoin and Dogecoin investment 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.At first glance the service appears to be a transparent Ponzi scheme, with the addition of some lies since Ponzi schemes are illegal. The latter is due to the fact that they inevitably must fall apart, as it is not possible to recruit the required new members forever. People considering to invest despite knowing this should release that the odds of winning at a Ponzi scheme are signficantly worse than the odds of winning at regular gambling.

Persuasion
Total Flags: 14 (3 Warnings = 1 Flag)
Phantom Richesflag-iconThe service's name "BitcoinsDouble" and its main slogan "double your coins in just 100 hours" leave little to be desired.
Scarcitythumb-up-iconN/A
Source Credibilityexclamation_warningThe service tries to build credibility by stating that it consists of a "group of professional traders and skilled analysts with valuable experience in the sphere of cryptocurrency".
Social Proofexclamation_warningThe website prominently features a list of all current investors (including the invested amounts). On top of that users can earn a whopping 10% in referral fees.
Reciprocitythumb-up-iconN/A
Products
Guaranteed Returnflag-iconThe FAQ mentions that "one of our strongest advantages over competitors is that we provide insurance in investing funds".
High Return / Low Riskflag-iconBitcoinsDouble offers one investment plan: 100% profit in just 100 hours.
Overly Consistent, Positive Returnsflag-iconThe investment plan returns a perfectly steady positive income percentage regardless of any external variable such as price volatility.
Downplaying Risksflag-iconBitcoinsDouble "offers the clients the best management as well as risk control systems" and "warrants the safety of the invested amounts and interest stability"
Secretive or Complex Trading Strategyflag-iconBitcoinsDouble has a simple strategy of "buying low and selling high", apparently granted with the magical gift of perfect timing.
Service
Website Availablethumb-up-iconYes
Website Registration Detailsexclamation_warningbtc2x.com is a newly registered website, with its registration date on December 1 2015.
Website Designexclamation_warningThe website looks effortless and outdated. Even the logo is just plan text.
Grammar on Websitethumb-up-iconGood
Payments Optionsexclamation_warningCryptocurrency only, conveniently leaving the recipient with sufficient anonymity.
Service Disruptions & Unbusinesslike Conductflag-iconIt is not typical for an investment service to disclose exactly who invested what amounts.
Contact Informationflag-iconThe only way to contact the service is via email.
Business
Verified Addressflag-iconNo information has been disclosed, and the website registration is privacy protected.
Verified Ownerflag-iconNo information has been disclosed, and the website registration is privacy protected.
Business Registrationflag-iconA business registration could not be found.
Financial Regulator Registrationflag-iconA business registration could not be 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.

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.

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