What is PlexCoin? Is it a scam

Return of 1354%: When blockchain entrepreneurs take advantage of the naivety of investors

Fraud around cryptocurrencies, ICO and the term blockchain are increasing. The crooks take advantage of the greed and lack of knowledge of investors.

The issue of PonziCoin shows an example of what is going wrong because of greed and lack of information about crypto currencies. Although the whole thing was set up as a gag (Ponzi Scheme is the English expression for pyramid scheme), investors transferred several hundred thousand dollars for an ICO (Initial Coin Offering). On the website, it said, in large letters, “world's first legal fraud system”. Surprised by the naivete of investors, the founders of PonziCoin took the money and disappeared, never to be seen again.

False promises

There are many such stories - and not all of them are so easy to read through. The amount of damage is sometimes much higher. The US financial market regulator SEC frozen all proceeds from the Plex Coin ICO, around $ 15 million, in December. The founder, who is now in custody, promised investors an unrealistic return of 1354%. The coin issue was supported by a group of "false" experts. The income was only invested in other crypto currencies by the founder.

Missing business model

The ICO of Benebit, whose token should summarize customer bonus programs such as frequent flyer miles, was very professional in terms of marketing and had already raised several million when a prospective customer noticed that the images of the alleged Benebit management had been misused by an English private school . A lot of money was also collected from Opair, Ebitz, Recoin and DRC, but soon after the ICO it turned out that there were no serious business models.

From iced tea to blockchain

Companies that see no possibility of carrying out an ICO but want to ride the digital wave - without actually being able to contribute anything - try changing their names. The renaming of Long Island Iced Tea to Long Blockchain Corp generated a lot of headlines. This led to a doubling of the market capitalization in the short term. In the meantime, Long Blockchain has been delisted from the Nasdaq because the market capitalization fell below $ 35 million.

Surprising change

The transformation into a blockchain company was also carried out by Bioptix, which previously sold veterinary supplies. The company is now called Riot Blockchain and has bought two stakes in Canadian crypto companies. The share price quintupled and the market value rose to over $ 500 million. But the company is making losses and has hardly any assets. Many such “new” blockchain companies are still bustling around. With the term blockchain in the name of the investor, for example with the German advanced blockchain, the warning lights should first go on.

All of these cases are annoying and often outrageous frauds. However, they do not give any indication of the potential of blockchain in particular. There were also false promises and frauds in the environment of the dot-com bubble, the triumphant advance of the Internet and online offers, but this did not affect it.