The world of alternative currencies brings with it a host of scammers, stealers and black market sellers. They bring a bad name to decentralized systems like bitcoin. The fact that it is a network of financial value that spread across the globe has seemingly brought to it a degree of strangeness. Today, let’s take a look at some of the weirdest alternative currency stories over the past few years.
Bitcoin savings & trust
As a hedge fund, Bitcoin Savings & Trust promised its investors spectacular returns. And its investors, seeking more opportunity than just what bitcoins could provide, willfully provided the principal of the fund with over $5 million in BTC. Even the title of this “fund” might put an investor off. But that’s not what Bitcoin Savings & Trust thought. Of course, that’s probably because the “Trust” part in the name was fakery. It was scamming people. When the proprietor, named Pirateat40 on the Bitcointalk forums stopped paying, this is what he told investors.
That’s the complete description of a Ponzi scam. It’s been reported that the SEC is investigating this, but there hasn’t been any news on this in quite some time. The moral of the story is that you shouldn’t expect someone to make a high return for you on an investment in bitcoins. Or any money.
Aaron Greenspan sues Silicon Valley for transmitting money
A lot of companies take money from people and allow them to spend it in “credits”. According to a law passed in California, any business that operates in this way must register with the state as a money transmitter. Business Insider has referred to the law, known as the Money Transmission Act (MTA) as an “Innovation Killing Law” for California-based startups. That’s because, among other rules, it requires a large financial commitment in order to be in business: a net worth of $500,000.
Greenspan, an internet entrepreneur and owner of Think Computer, experienced an example of this innovation killing when California authorities couldn’t even give him the guidance to operate his FaceCash mobile payments business legally. For this reason, he decided to sue Facebook for its Credits platform, Dwolla for its payments system, Stanford for its student ID payment system, both CoinLab and CoinBase for Bitcoin exchanges, among others since they aren’t registered. Ridiculous law? You decide. There’s a plan to reform it, but progress is moving slow.
Seriously, who told the Winklevoss about bitcoins? The guys who sued Mark Zuckerberg over Facebook and won have told the media that they are holding bitcoins for the long term. Now they are offering a fund that provides access to their holdings of bitcoin. One might argue that it makes sense to try to give the average investor access to bitcoins. But this offering sounds like a way to get bitcoins back into the public conscious. It may not be quite the right time to do this.
Bitcoin is going through a serious growing stage. Price volatility remains high, and mining technology is about to cause serious increases in mining difficulty. It’s hard to predict how that is going to affect the network. The best time for a Bitcoin ETF may be a year or two away. This is especially true when the Winklevoss prospectus’ section about risks sounds like something out of a currency war set in the distant future.
Romney blackmailed for bitcoins
Before the 2012 election, people really wanted to see presidential candidate Mitt Romney’s tax returns. One activist was so riled up about Romney keeping his tax information a secret that he gave Mitt an ultimatum. Give me $1 million in bitcoins and I won’t release the tax return information about you that I have acquired. Surely, the non-technical Romney was undeterred; he probably had no idea what “bit” plus “coins” even meant.
It turns out that the Secret Service took this threat seriously. Michael Mancil Brown of Franklin, Tennessee, has been indicted on charges of fraud. Not only was Brown being fraudulent, he was lying: he never even stole the tax documents. If this had worked, Brown might have had trouble cashing the bitcoin in: authorities would have been sure to follow the transactions on the address from the blockchain. But let’s face it: keeping tax records secret isn’t worth $1 million in bitcoins.
Atlantis hides its drug-dealing from no one
The Tor-accessible site Atlantis is like Silk Road with a marketing department. Despite the fact that drugs have been illegal for decades, Atlantis has let the world know that they offer great service, fast shipping and anonymity. Just pay with bitcoins! The problem is that when you wag your finger in the face of law enforcement like Atlantis is doing, that makes them angry.
Perhaps Atlantis did not notice that the Drug Enforcement Agency has started to seize bitcoins used for drug-related purposes. Yes, sometimes the authorities can be behind on technical innovation. But it appears that they are catching up with bitcoin because they realize that the money is flowing there. And they will always follow the money no matter how technical something is. They are used to this endless cycle: criminal comes up with new scheme, and the police find a way to fight back.
The AMAZING Anonymous Bitcoin Lottery
Do you like lotteries? What about one that is anonymous? Then you are going to love the AMAZING Anonymous Bitcoin Lottery. Unlike most lotteries, you won’t know where your money is going. And if you win, you won’t know where your money comes from. If that doesn’t sound suspicious to you, then you’ve probably been involved in money laundering at some point in your life.
In an environment where we’re seeing progress with bitcoin transparency, a site like the AMAZING Anonymous Bitcoin Lottery is a major disappointment. There are problems enough running a regular bitcoin operation, but in the name of making money the owners of this operation don’t want you to know anything about them. Instead, they’ll offer you other diversions to deflect those types of questions: if you get tired of playing the AMAZING Anonymous Bitcoin Lottery, you can play their other offering. It’s called Dice on Crack.
Know of an even weirder altcoin story? Do you have some information to back it up? Share it with us in the comments!
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.