Cryptocurrency app is accused of defaulting on thousands of people – 03/18/2023 – Market
Thousands of people are believed to have lost their savings after investing in a cryptocurrency trading app called iEarn Bot.
Experts who investigated the company say it could be one of the biggest cryptocurrency scandals to date.
Investing in cryptocurrencies has been gaining popularity amid promises of big returns in short periods.
But officials warn of a growing number of scams and urge investors to be careful.
The app, available on Android and iOS systems, has a website with versions in several languages, including Portuguese.
‘The money just disappeared’
Roxana, real name, is from Romania. She says she lost hundreds of euros when she invested in iEarn Bot. She asked not to be identified as she fears her professional reputation could be damaged.
Customers who bought the bots — like Roxana — were told their investment would be managed by the company’s artificial intelligence program, with guaranteed high returns.
“I invested in a bot for a month,” Roxana tells the BBC. “You could see how many dollars the app was generating: there were graphs showing how the investment was progressing.”
“It looked pretty professional until at some point they announced they were down for maintenance.”
At that point, for some time, withdrawals from the app were frozen.
“Some people started saying ‘I can’t give up… what’s going on,'” explains Roxana. “I made the withdrawal request and the money just disappeared. The wallet was zero – I never received a penny.”
In Romania, dozens of important figures, including government officials and academics, were persuaded to invest through the app because it was backed by Gabriel Garais, one of the country’s leading IT experts.
Garais says he was also tricked into investing his own savings in the app and lost his money.
But Roxana insists that if it weren’t for Garais, she would never have thought of investing.
“We believed this could be a hoax,” she says, “but the fact that between us and the company was a reputable professor, we didn’t check too much — we didn’t doubt too much.”
What happened in Romania is not an isolated incident.
When Silvia Tabusca, a Romanian expert on organized crime at the European Center for Legal Education and Research, started investigating the iEarn Bot, she found that many people in other countries had also lost their savings.
And what surprised her most was the scale of the operation.
“From what we’ve seen, the number of investors is quite high,” she says. “In Indonesia, for example, they [iEarn Bot] claim to have 800,000 customers.”
“In the beginning, the application works very well,” says Tabusca.
“But once they have enough investors and enough money invested in a specific country, they no longer allow users in that country to withdraw — and they start investing in other countries.”
iEarn Bot presents itself as a US-based company with excellent credentials, but when the BBC checked some information on its website, it discovered inconsistencies.
The man the site names as the founder of the company told us he had never heard of them and said he filed a police report.
The prestigious MIT (Massachusetts Institute of Technology), alongside companies like Huawei and Qualcomm, are all named as “strategic partners” of iEarn Bot, but they also said they had no knowledge of the company and that they are not working with it.
On the website, the company does not provide any contact information.
When checking the history of its Facebook page, the BBC report found that, until the end of 2021, the account advertised weight loss products. It is administered from Vietnam and Cambodia.
iEarn Bot encourages investors to recruit more people to join the app.
“The way people operate at this company is more similar to a Ponzi scheme (financial pyramid) than a real business,” says Tabusca.
The BBC report also saw chat conversations in which people, who claim to be from iEarn Bot customer service, told investors that to withdraw their money they would have to pay a 30% fee.
“Some people were desperate to get their money back, so they paid the fee — but still couldn’t withdraw,” says Tabusca.
The BBC report tried to contact the iEarn Bot several times, without success.
In some countries, such as Nigeria and Colombia, users named as “local leaders” were pressured by iEarn Bot mentors —with whom they only communicated via Telegram— to organize recruitment events.
Andres, from Colombia, said he actively recruited people to join the app. He still believes the company is legitimate.
“They had their US registration that showed they were legit,” he says. “And they were paying.”
In his country, looting was stopped in December. People were told that the company was turning investment in USDT — a well-established cryptocurrency — into a new coin called iBot, which had the same value.
Investors were asked to wait until March, when the new coin was supposed to be officially launched. But they are still waiting to access their money.
“[As pessoas] borrowed to invest. They used money from other sources, many people were affected”, says Andrés.
“Since local leaders had no answers, people started to get angry.”
With the help of an analyst, the BBC report managed to identify a major crypto wallet that took payments from around 13,000 potential victims, making a profit of almost $1.3 million (about R$ 7 million) in less of one year.
But it was not possible to trace where and to whom the money went.
For investigators, this is a common problem.
“One of the challenges is identifying and assigning who the illicit agent is, where the value is going, and then being able to take investigative steps and law enforcement actions,” says John Wyman, head of the new Virtual Assets Unit at the FBI, the federal police of the United States.
Investigations in this type of scheme, he says, quickly become global.
Such investigations require international cooperation and may take longer, but Wyman insists that those responsible are eventually brought to justice.
The FBI created the Virtual Assets Unit last year to respond to the growing number of crimes using cryptocurrencies.
The department urges people who have been victims of scams to file a complaint online.
But law enforcement agencies say the best way to fight scammers remains prevention.
“Knowledge — and pre-investment due diligence — is key,” says Wyman.
“If it sounds too good to be true, doubt it.”
This text was originally published here.