October 31st, 2018

Highwaymen on the crypto path: Halloween edition

Highwaymen on the crypto path: Halloween edition

October 31st, 2018

Future Times Halloween Special

If evil creatures like Freddy Krueger and Jameson Voorhees live only in scary movies, other villains very well may sneak up on you in real life and not only on Halloween. The ones keeping the financial sphere in awe pretend to have good intentions, promising great income, only to vanish with your money, killing your dreams of becoming influential and wealthy. Unfortunately, scams and frauds in the crypto community happen almost on a daily basis.

Today, we have prepared two remarkable and tricky stories, that might make you grip if not your heart, then, most certainly, your wallet. BitConnect and Centra aren’t what they seem to be. These two projects are a part of the Carnival culture, and they will be unmasked today.

What is a Halloween without any disclosures?


What can be a better temptation for an unsophisticated trader than an opportunity to invest into a cryptocurrency with a market capitalization of nearly a $1 million and a place on the top-20 most successful tokens list? Here is when BitConnect with its BBC currency comes into play.

Quotting the official webpage, BitConnect is described as “a self-regulated financial system”, “an open source crypto community platform” with multiple options for money investment and “cryptocurrency education” as an added bonus. Furthermore, there is no white paper and zero information about the cryptocurrency creators. A smart and sophisticated trader will immediately recognize a red flag.  Editorial note: According to the NextWeb and the filing of the article, that denies you supposedly expired access, more than 75% of BitConnect shares are owned by Ken Fitzsimmons, who doesn’t ever appear anywhere on the webpage.

The educational bonus (as the corresponding section on the site) is basic information about Bitcoin, Ethereum and Ethereum Classic (there are no other top cryptocurrencies described, from 2050 currently existing ones listed on Coinmarketcap), mining, crypto wallets and regulation in the first field of knowledge. The second part of the “educational information” is about the benefits of using BitConnect for trading, coin mining, creating miners’ pools, and etc. So, basically, a nicely masked product placement.

With a four-level investment system, each contributor was promised monthly earnings up to 40% of the total money return. The more you invest, the more you get. Sounds quite similar to the infamous “Bernard L. Madoff Investment Securities” scheme, doesn’t it?

The project held their ICO from 15th November to 30th December 2016, BBC was dubbed one of the best performing and promising currencies of 2017. During that time the company’s market cap was more than $2,6 billion with a value higher than $400.

Then, according to the official BitConnect web, “the trading bot and volatility software” were created to supposedly start making investors fabulously wealthy on a daily basis with a 1% ROI.

They chose a new multi-level marketing scheme to create a word of mouth popularity effect, based on success stories and people’s rumors.

BitConnect promoters, such as the alleged suspects in India Satish Kumbhani and Divyesh Darji along with a Youtube blogger Ryan Hildreth, who was first to upload a video promoting the scheme, but then quickly deleted it, have also contributed to the widespread knowledge about the Ponzi scheme. An important note: their success stories were raising questions as well.

For example, this one, with most of the money coming from affiliates bonuses, rather than the investment process itself.

The British Registrar of Companies sent BitConnect a strike-off notice with a warning to shut it down and cancel all its operations giving them two months to “cause to the contrary” before its registration can be stricken off and all the assets seized.

Upon the dissolution all property and rights vested in, or held in trust for, the company are deemed to be bona vacantia and will belong to the crown accordingly.

The alarming signals were then noticed by more than just niche media resulting in discussions on Reddit, that got quite a bit of momentum. The price of BBC fell from $287 to under $230, getting stable later on at $245. And even after all those problems with authorities BitConnect still continued to promote itself, making a networking event in Thailand in autumn 2017 with “acrobatic performances, dance and live entertainment”.

Nevertheless, on 17th January 2018, despite all attempts to remain afloat, BitConnect stated they were shutting down their exchange platform after receiving two cease-and-desist letters from state authorities, the Texas State Securities Board and North Carolina Secretary of State Securities Division. They were accused of illegal sales and affected by denial-of-service attacks.

But it doesn’t end there as according to the Times of India, in September 2018, Illinois and Arizona authorities asked Indian Criminal Investigation Department to confiscate all property owned by the BitConnect promoters Satish Kumbhani and Divyesh Darji. They misled investors causing them to lose about $5,6 billion, which made the U.S. issue threats to seize their property through CID.

Moral of the story is that not all that glitters is gold. Promises of becoming a billionaire in three years are all good, but if that prospect compulsively comes from a third party, it is more about playing on your greed, excitement and … laziness? Nevertheless, BitConnect still exists and can be bought by those unaware of the whole story. According to Coinmarketcap, BCC tokens can still be purchased on Changelly and Crypto.com and traded on HitBTC. Though, for the BBC better times are gone and it is unlikely to attract new investors. Just look at the Coinmarketcap linear scale.

Source: coinmarketcap.com


Inexperienced investors may possibly be attracted through a well-thought-out projects promotion that crusty old marketers make involving famous media personalities, promising perspectives, and impressive at first sight executives biographies. Indeed, fact-checking can unlock an unpleasant truth, but, unfortunately, not all traders stay ahead of this. In the Centra case, this approach could have saved their fundings, but didn’t…

The following advantages attractiveness, later proven to be illusory and fake, were used to make the project alluring for investors at its first stage:

“Internationally we currently have our license with Mastercard to service international clients; domestically we have a Visa partnership, so we’re able to issue Visa cards domestically,”

– Sam Sharma, co-founder of Centra

  1. Cooperation with Visa and Mastercard. Centra Cards, introduced by the platform as a product of the future, could allow its holders to spend their crypto assets anywhere in real life. However, it wasn’t the first platform proposing real-time payments in cryptocurrencies: for example, TenX has been in the game before Centra has even appeared with its card system, wallet and so on and so forth. Centra’s success against more valuable competitors may be attributed to its fictional (as it turned out to be) coop with Visa and Mastercard as well-known and trusted payment system. In fact, as SEC stated back then, there wasn’t any kind of partnership between Centra, Visa and Mastercard and no intentions to create any product coming from the company
  2. Famous people involved in the project. The approaching ICO was strongly promoted by a famous boxer Floyd Mayweather and a rapper and producer DJ Khaled on their social media. As of today, Mayweather has 7,94 million followers on Twitter and his Centra initial coin offering post got more than 5500 likes and 1400 retweets.

This way a famous boxer and a popular rapper raised awareness about Centra, attracting public attention through social networks. Editorial note: According to the latest TMZ report, they will be brought to justice by jilted investors. This was later highlighted by The Next Web, CCN, Cryptoslate and other media sources.

With the investors’ illusions of being supported by influential payment systems and celebrities, Centra and its CTR token got more than $32 million during its ICO in 2017, according to the SEC press release. Editorial note: Different sources offer different information on the dates of ICO and the number of funds raised, that’s why we used ex-post facto information from the official source as the most trusted one.

Things went pear-shaped after a successful ICO. On 31st October, right on Halloween, as the true Centra mystical beings they are, Sam Sharma and Raymond Trapani left the project.

In that regard, Centra Tech has made recent additions and changes to expand our Executive Management team. Co-Founders Sam Sharma and Ray Trapani are stepping aside to support the continued growth of the Company. These seasoned entrepreneurs were passionate about creating a world connected to cryptocurrencies and they did just that.

– Centra Tech statement in Medium

As Business Insider assumes, the reason was connected with the New York Times article, exposing these entrepreneurs complete lack of experience in the business sphere along with having perjury charges. Reputations counted Centra project needed to remain afloat and pull one over their investors without suspicious executives.

Now, all three founders of Centra, Sam Sharma, Raymond Trapani, and Robert Farkas, are being detained by federal authorities. Sam Sharma and Robert Farkas were arrested on the 2nd of April.

The next day after the detention, the complaint from SEC against these two men was dropped. The original complaint didn’t include Raymond Trapani, and, according to Business Insider, the reasoning behind this move is not immediately clear. Editorial note: Business Insider wrote about Trapani’s involvement with the fraudulent scheme back in November 2017, at the same time discovering there are non-existent people mentioned as Centra’s executives.

We allege that the Centra co-founders went to great lengths to create a false impression that they had developed a viable, cutting-edge technology. Investors should exercise caution about investments in digital assets, especially when they are marketed with claims that seem too good to be true.

– Robert A. Cohen, Chief of the SEC Enforcement Division’s cyber unit

In reality, Centra project wasn’t anything groundbreaking, revolutionary or cutting-edge. Their “original” idea seems to replicate TenX, all the “plans” turned out to be empty rhetoric. The only (but significant!) advantage that can be deemed a well-thought marketing and promotion mechanism was influencing people using big names from Visa and Mastercard to DJ Khaled, who would happily *not* be involved in a process casting a shadow so dark on their reputation. It’s old as the hills and investors are still caught up in the external rigging not getting to the bottom of the essence. If you are scared of losing money and afraid to be deluded, keep your eyes peeled not to be exposed to evil…

The only advice for your following trading life, not just for Halloween, is to take care of your assets and remember that villains are on guard! MUAHAHAHA 😆😆