Fraud Risk Assessment: Royal Hash

Royal Hash
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  • Royal Hash
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  • Last modified: October 14, 2015
  • Legitimacy
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Royal Hash (royalhash.com) was launched in September 2015 providing 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: 11 (3 Warnings = 1 Flag)
Phantom Richesflag-icon"Fast, lucrative and secure!" is the main slogan of the website, along with explicit promises of guaranteed (fixed) returns.
Scarcitythumb-up-iconN/A
Source Credibilityexclamation_warningThe website mentions a "staff including industry professionals in engineering, advanced computational technology, and cryptocurrency mining techniques" to build trust in the company's capabilities.
Social Proofexclamation_warningRoyal Hash has a 5 percent commission referral program, which can increase up to a staggering 10 percent, intended to get users to convince friends and relatives to invest as well.
Reciprocitythumb-up-iconN/A
Products
Guaranteed Returnflag-iconAs written in the FAQ: "we are able to maintain a secure and stable Bitcoin investment platform that guarantees stable and fixed daily interest for all of our customers at any given time".
High Return / Low Riskflag-iconRoyal Hash promises an hourly return starting at 0.15% per hour. This translates to the already extreme rate of 1300% per annum. It should, however, be considered that payouts can be reinvested. Therefore returns should be continuously compounded (including returns paid on reinvested returns). Doing so reveals an annual return percentage of more than 50,000,000%, meaning that every invested $1 could, at least in theory, turn into more than half a million in one years' time.
Overly Consistent, Positive Returnsflag-iconThere are two available investment plans, both of which return a perfectly steady income percentage regardless of any external variable such as mining difficulty, network hashrate and price.
External Risk Insurancethumb-up-iconN/A
Hardware Equipment
Public Mining Addressflag-iconNo
Pictures of Mining Equipmentflag-iconYes, Royal Hash features an image that could be intended to represent its data center, but it happens to be the same (fake) image that was also used in another recent cloud mining scam.
Secretive or Complex Equipmentflag-iconThere is no information available on the mining equipment. The company only vaguely states that it uses "advanced computer equipment" and "effective and standardized algorithms to help it obtain its financial goals".
Service
Website Availablethumb-up-iconYes
Website Registration Detailsexclamation_warningRegistered September 17 2015, for a period of just one year.
Website Designflag-iconThe design include limited (and not original) terms and conditions plus several images that do not actually represent Royal Hash's data center or office.
Grammar on Websiteexclamation_warningAbout the only text on the website that doesn't contain any errors must be the terms and conditions, which is evidently copied from an external source.
Payments Optionsexclamation_warningBitcoin only
Service Disruptions & Unbusinesslike Conductflag-iconThe lack of specific terms and conditions result in limited legal basis for doing business.
Contact Informationthumb-up-iconThe company lists both its address and a phone number.
Business
Verified Addressthumb-up-iconThe official registration is on:

32 London Bridge St,
London, SE1 9SG

This address has not been checked physically.
Verified Ownerexclamation_warning"Jeff Taylor" is named as the official owner, but this person has no online footprint.
Business Registrationthumb-up-iconRoyal Hash is registered in the UK with company number 09784749.
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.

Comments (9)

  1. Joaquin October 28, 2015
    • Digiconomist October 28, 2015
  2. Ropeyjunjo October 29, 2015
    • Digiconomist October 30, 2015
    • Alpha October 30, 2015
      • Digiconomist October 30, 2015
  3. ALBalawag November 1, 2015
    • Digiconomist November 2, 2015
  4. Sandy Widus April 30, 2016

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