Investors who say they lost hundreds of thousands of British pounds in an alleged cryptocurrency fraud have had no luck persuading the police that there was, in fact, a crime committed.
According to an investigation by the Metro newspaper published Tuesday, a number of investors said they had invested in a cryptocurrency project called Lyfcoin on promises of hefty returns, but had not received their money back.
According to the allegations, investors were told to make staking commitments for five months to receive a 100% return, but as the period was ending they were told they'd have to extend to 12 or 24 months. Staking is a way of supporting some blockchain networks and earning rewards by committing funds for a period of time.
While it's not alleged by the newspaper that Lyfcoin itself is a fraudulent scheme – though investors likened it to the multi-billion dollar OneCoin scam – investors who spoke to Metro.co.uk said they had been encouraged to invest by individuals claiming to be involved with the project.
The group says it lost around £100,000 (US$130,000) in investing in the coin and estimates that up to £2.5 million ($3 million) could have been lost in the U.K. in total.
They claim an individual named Sakhi Rezaie recruited people for the alleged pyramid scheme, showing presentations, holding Zoom seminars and inviting potential investors to his Birmingham office. Payments to stake the token were sent to Rezaie's bank accounts and not to an official Lyfcoin account, they said.
Rezaie has claimed he was merely an investor in the crypto project, Metro said. However, the newspaper was shown WhatsApp chats and proof of payments to his account in the name of M.K. Brothers Ltd by an investor who lost £36,500 to the scheme.
The investors further allege there were several "ringleaders" in the U.K.
After payments were made, Rezaie "ignored" queries from investors about selling their stakes, they claim.
The lyfcoin token had been touted as having a value of $1.60, but investors say they later found that it is not traded on most exchanges and in effect had a value of "zero." They were not provided with a wallet or tokens, they said.
One investor made a report to U.K. reporting organization Action Fraud, which Metro said passed it on to the West Midlands Police. This spring, he signed a contract – seen by the Metro – with Rezaie promising to drop the case and apologize on social media in return for monthly payments of roughly £5,000 ($6,470). He claims to have received only one payment.
The investor said he managed to claw back £18,500 of the £36,000 he put in after warning members of a Lyfcoin WhatsApp group about the alleged fraud.
West Midlands Police dropped the case, however, saying none of the evidence provided took the case "further forward" and in a later statement to the Metro said "no offenses had been committed." Fourteen investors are still pushing authorities to investigate the scheme.
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