Saturday, December 15, 2012

Cyber-currency: source of good... or evil?

one oz. Proof U.S. gold bullion
one oz. Proof U.S. gold bullion (Photo credit: Wikipedia)
BitCoin, a cybercurrency, made news when it launched in 2009, as it was not released by any central bank (i.e. backed by any country or group of countries, or any real assets like gold or silver reserves), and thus, is virtually untraceable. However, it's hardly the first cybercurrency. e-Bullion preceded it by several years having been launched in 2001.

The difference is e-Buillion is a scam that involved in murder, and it was used to scam people as well.

e-Billion was created by a Jim Fayed who lived in California, though e-Bullion was specifically incorporated in Panama in 2001, and its servers located in Switzerland as to prevent "interference" by US authorities. Though eventually he had to locate some servers in California.

e-Bullion was marketed as an investment, where you can buy precious metals from them, but does NOT physically take delivery of them. Instead, you basically exchanged your "real" currency for their virtual cybercurrency, which is backed by their precious metal reserves stored in several locations, like Australia, Switzerland, and so on.

And why would you do such a thing? To trade with other e-Bullion members, of course. In other words, they're acting like a bank, but have no such license from ANYWHERE.



It's serious enough that FBI and IRS investigated e-Bullion, esp. when a lot of HYIP (Internet Ponzi schemes) claimed they accept the e-Currency (the cybercurrency from e-Bullion). The catch is, of course, if you bought e-Currency with your real currency, you've basically sent your money offshore, with virtually no recourse should something goes kaput. US then brought forth a forfeiture lawsuit against Jim Fayed as well, seizing millions in platinum and other assets such as bank accounts.

Then the Australian authorities got involved, because e-Currency was used in various scams that victimized many Australians. So much so, that a judge, after local investigation, along with US authorities, signed off an order that forfeited all local (Australian) assets of Jim Fayed and the two corporations he controlled, to the tune of 13 million dollars.

So what happened to Jim Fayed? He's on "death row" in California for hiring a "hit man" to murder his wife who's about to leave him. He was dumb enough to pay for a rental car which was spotted leaving the murder scene.

So what does this have to do with a scam?

It seems EVERY scam that promise high returns want to get paid via some very convenient ways, that's virtually untraceable. Western Union money transfer is a favorite way, where you basically send to a particular name only to a particular branch. Others would include Solid Trust Pay, NxPay, and Payza (formerly AlertPay). There's also Liberty Reserve out of Puerto Rico. They often claim to be just currency exchanges, and/or eWallet providers, but that money has to go somewhere...

PayPal, the biggest name in the business, have specific policies NOT to do business with anything suspected of HYIP or scam.

For example, TVI Express (and its various clones) use Liberty Reserve. Solid Trust Pay and Payza are often used by HYIP crowd, and NxPay (along with STP and Payza) was used heavily by Zeek Rewards ponzi.

Such scams often claim they can't accept credit cards due to "fraud" or they want to save you "fees", or they actually operate on a foreign currency thus need such exchanges. Such were often merely excuses as they failed to provide any proof of such fraud.

The simple truth is in order to accept credit card, you need to have real bank accounts and provide some background info to the bank for a "merchant account", which a lot of these scammers are scared to provide.

The really sophisticated scammers WILL find credit card transactors from around the world that'll do the payment for them... on the other side of the world, which will trigger banking alerts at your bank, as you probably did NOT buy anything from Puerto Rico, or Korea, or Malta. You'll have to turn such alerts off, which increases the chance you'll get slammed by some OTHER SCAMS.  This was done by Zeek Rewards, probably suggested by their consultant.

Not to mention once your name ends up on the "sucker" list, you'll get marketed with more and more of these scams.

Beware of any new opportunities that calls for payment methods OTHER than credit card and/or Paypal.

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This blog post was inspired by
http://www.forbes.com/sites/billsinger/2012/08/02/deadly-gold-scam-used-cyber-currency/
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