Fraud Risk Assessment: Coince

Coince
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  • Coince
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  • Last modified: December 7, 2017
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Coince (coince.com) was launched in January 2016 providing Bitcoin investment and cloud mining 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: 16 (3 Warnings = 1 Flag)
Phantom Richesflag-iconInvestors are lured by advertising that they may "double their money quarterly"
Scarcitythumb-up-iconN/A
Source Credibilityexclamation_warningThe company introduces itself as follows: "Power Supplies & Equipment Limited is a British multinational corporation headquartered in London that was founded on January 2008 [experienced] and rapidly became one of the major leaders in the wholesale electricity market by boasting professional traders and a highly experienced engineering team". All of the terms highlighted in bold are used to create the image of a credible company.
Social Proofexclamation_warningCoince has referral program that offers a rather high commission of 5%
Reciprocitythumb-up-iconN/A
Products
Guaranteed Returnflag-icon"Guaranteed Returns" are part of the offered investment package.
High Return / Low Riskflag-iconCoince pays 2% per day on the original investment for period of three months, resulting in a total of 180% of the original amount by the end of the contract (a profit of 80%). On an annual basis, the profit would even come down to 620% if the same amount is invested each quarter. This is an absurd and unsustainable rate of return, which just gets more extreme if returns are properly compounded. If returns are reinvested each day, then $100 could in theory turn into $125,000 in just one years' time and $155 million in just two years' time. The only way to sustain these rates of return for at least a short period of time is in a Ponzi scheme, for as long as reinvestment rates and user growth rates remain high.
Overly Consistent, Positive Returnsflag-iconReturns are perfectly consistent and explicitly stated to be independent of Bitcoin or electricity price fluctuations.
Downplaying Risksflag-iconThe website is full of typical lines such as "Investing has never been so safe & easy" and "safe and non-risk investment environment".
Hardware Equipment
Public Mining Addressflag-iconNo
Pictures of Mining Equipmentflag-iconNone
Secretive or Complex Equipmentflag-iconCoince offer investments in electricity and miners, but neither has any serious substantiation.
Service
Website Availablethumb-up-iconYes
Website Registration Detailsexclamation_warningCoince.com has been registered for a long time, but did not launch in its current form until January 11 2016. It is therefore still a very new service.
Website Designthumb-up-iconCoince doesn't have a very good story, but at least the website's design is good.
Grammar on Websiteexclamation_warningThe website features several sloppy mistakes such as "Your daily sales will be added to your Coince account balance automatically every 24 hours". "Profit" or "revenue" would make more sense in this context.
Payments Optionsexclamation_warningBitcoin, Payeer, PerfectMoney, all of which leave the recipient with sufficient anonymity.
Service Disruptions & Unbusinesslike Conductflag-iconTerms and conditions may be present, but the content makes zero sense. It only states a few general terms, while including zero references to any business activity. Legally this means an absence of legal basis for doing business.
Contact Informationflag-iconAn address and telephone number is provided, but meaningless (see Business Registration).
Business
Verified Addressflag-iconThe provided address is:

1 Lumley Street, Mayfair
London W1K 6JE
United Kingdom

This address is, however, meaningless as the company isn't real (see Business Registration).
Verified Ownerflag-iconJoseph Miller is mentioned as the owner, but this person has no online identity and is likely as fake as the company (see Business Registration).
Business Registrationflag-iconCoince is owned by Power Supplies & Equipment Ltd, a "top-performance financial service provider of London" (founded 2008', registered in the UK business registered with number 06470633.

The problem with this company is that even though the registration is real, nothing can be found on the actual company elsewhere. This could be explained by the given SIC code: 74990. This code indicates "non-trading companies", or simply companies not engaged in any business activity (generating an income from assets). The company is also not registered with the UK's regulator for Gas and Electicity markets (Ofgem).

In short, there is no real company.
Independent Auditsflag-iconPower Supplies & Equipment Limited has an accountant signing on its (limited) annual filing, but the accountant explicitly declares "We have not been instructed to carry out an audit or a review of the accounts of Power Supplies & Equipment Limited. For this reason, we have not verified the accuracy or completeness of the accounting records or information and explanations you have given to us and we do not, therefore, express any opinion on the statutory accounts".

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.

Comments (15)

  1. David Durel February 25, 2016
  2. Stanislas Pinte February 27, 2016
  3. Carol Carol April 1, 2016
  4. Rick Rick April 1, 2016
  5. Digiconomist April 1, 2016
  6. April April April 1, 2016
  7. Loren April 2, 2016
  8. tenningster April 2, 2016

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