The unsolicited invitation slid into my What'sApp messages in March.
I was intrigued. I’d only recently joined TruthDAO as a crypto reporter, but I had more than 20 years of experience as a business and personal finance writer for globally recognized media platforms. I followed the instructions and signed up for the New BTC77 bitcoin investment club.
A welcome message soon followed:
New BTC77 is a “short-term cryptocurrency investment group” that uses a variety of investment strategies, the message explained. The profit rate, it casually added, “is 10%-60%, and the daily income is 500-10000.”
I let those eye-popping claims sink in -- 10%-60% profit rate and a daily profit of $500-$10,000. According to the message, BTC77 was populated with “hundreds of Wall Street cryptocurrency analysts.” In other words, I’d be in the company of smart, informed investors, so no need to worry.
I was worried.
Crypto Scams are #1 Threat to Investors Worldwide
As a longtime business writer, I know that any promise of easy money is an instant red flag. I also knew this: lured by the possibility of turning a fast buck, crypto investors are piling into investment groups like this at a rapid clip right now. None of these outfits are required to register with the Securities and Exchange Commission, or any other regulatory body, for that matter. Investors are on their own.
Because of the decentralized nature of crypto, there’s no way to say, for sure, how many investment groups are out there. Rough estimates put it in the thousands, and new ones are being formed every week. But one thing is clear: a handful of investment vehicles are having an outsized impact on the cryptocurrency world.
According to Statisa, which tracks market and consumer data worldwide, the top 20 cryptocurrencies currently account for 90% of the market. To put that in perspective, there are more than 10,000 coins in circulation right now. That leaves a lot of room -- and opportunity – for investors and scam artists alike.
Fraudsters are working hard. Between January 2021 and March 2022, consumers lost more than $1 billion to cryptocurrency fraud — with the majority of these losses coming from “bogus cryptocurrency investment opportunities,” the Federal Trade Commission said in early June. These groups often promise huge returns through crypto schemes, but once investors put their money in, it disappears, according to the FTC.
The North American Securities Administrators Association (NASAA), an international investor protection organization, says cryptocurrency scams are now the No.1 threat to investors worldwide.
Warns Joseph Rotunda, NASAA’s Enforcement Section Committee Vice-Chair: Cryptocurrencies and related products “may be nothing more than public facing fronts for Ponzi schemes and other frauds.”
Consider the rags-to-riches-to-rags experience of BitConnect, a high-yield program that launched in 2016. Right out of the gate, it promised fantastic returns. And for a while, indeed, returns were fantastic – until they weren’t. Last year, the SEC charged BitConnect with using a Ponzi-like scheme to defraud investors out of $2 billion. The platform shut down in 2018.
BTC77 Doubt Creeps In
That brings me back to the New BTC77 investment group. As it turned out, other members also had their doubts:
“Man, this is (a) scam,” said one of my fellow members, Nathan – no last name provided. A BTC77 administrator promptly removed Nathan from the group. Another participant, “H,” said “these ppl cheated and stole my 5000 here. This is fraud group. All be careful.” H also disappeared. Neither could be reached for comment.
I hung in, eager to see where things were headed with the New BTC77 investment group. A daily routine was soon established. Like clockwork, every day a few active participants would kick things off by chatting about innocuous topics. “I'm getting ready for a BBQ,” one participant offered, and then went on to detail the weather. He even posted a picture to back up his claims. On another occasion, Elimi, listed as an administrator, posted a picture of fruit that the person was shopping for at a local market.
But at some point, invariably, investment advice would arrive. And the drill went something like this:
Trade small amounts of cryptocurrency every 180 seconds. If you lose your money, double the amount invested until you win.
Why so insistent? According to the administrator, and I am quoting this exactly: “With enough money, the win rate of this way is 100%.”
To assuage any concerns, members were assured that the group uses supercomputers “that have professional chips, use a lot of graphics cards, and consume a lot of power” to calculate the direction of cryptocurrencies. Again, this was direct from the message I received as a member of the BTC77 investment group.
Members were additionally offered one-on-one “intermediate VIP and senior VIP” sessions with a Wall Street analyst who could generate 30% to 50% daily returns — emphasis added – according to the message chain. Other notices made similar promises of guaranteed profits, always with little to no risk for me and other investors.
"You Won't Understand"
After a few weeks of this, I decided it was time to start asking questions. But first, I had to identify myself as a journalist. I told the group — which had 60+ members at the time — that I was a crypto reporter for TruthDAO, and included a link to our website. I invited anyone who was willing to talk to me about their experiences with BTC77 to contact me directly.
An administrator, Millie, immediately invited me to reach out to her directly. Right after that, I was kicked out of the group.
I contacted Millie directly and asked her via WhatsApp about the group’s promise that working one-on-one with analysts will achieve high returns. That led to the following exchange:
Millie: Is your purpose to understand or invest?
Millie: The minimum to invest with an analyst would be $30,000, and the analyst would take 20% of profits. If the analyst lost any of the principal, the analyst would reimburse the investor.
Me: Isn’t that a bad deal for the analyst?
Millie: This is an analyst's confidence in his profession, you won't understand because you don't know anything about cryptocurrencies.
And so on.
I asked Millie who she worked for. Her reply: Kucoin, a Seychelles-based cryptocurrency exchange. I contacted Kucoin and asked if it was aware of the New BTC77 investment group. By email, a spokeswoman said the platform “will not provide trading advice, nor will we jointly organize such activities.” She never did answer my question directly.
I went back to Millie and told her what I’d learned. She responded by again asking if I was interested in investing.
Separately, Rose – another administrator of the New BTC77 group – reached out to me on Telegram. She also asked if I was interested in investment advice. I reiterated that I was a journalist writing a story about cryptocurrency investment groups. Rose responded by asking me to post her number in my story, to attract more investors to the New BTC77 investment group. I declined.
After I asked more questions about the promises the group was making to investors, Rose’s patience ran out. “Please don’t use your ignorance to explore the world,” she wrote. Rose then told me she considered my line of inquiry to be “harassment.” Her response struck me as an interesting form of cancel culture – the crypto version.
I never did find out whether any investor was able to realize the high returns the New BTC77 investment group promised. Nor did I ever manage to speak with any of the Wall Street analysts who were supposedly members, so I was not able to verify that claim, either.
But the experience did remind me, once again, of the golden rule of investing: Buyer beware. Or as the SEC puts it: “Big claims without details or explanations” are an automatic red flag.