BitLucky - the biggest Croatian crypto scam
In the evening of Friday, May 19, 2023. investors in a crypto currency investment and trading company received an email clearly stating that the company “ran out of money”. It is a Rijeka company, BitLucky, which according to current data has damaged more than 700 clients. Initially, the lost amount was thought to be $70 million, but it was still a slightly smaller amount of $15 million, according to current data. Police have confirmed that the owners, i.e. the perpetrators, are out of their reach for the time being. The director, Luka Burazer, has not yet contacted his clients or publicly released data on the company’s condition, and in the meantime several hundred clients, gathered on the Discord Group, claim that Burazer most likely fled the country, but we still do not have data to confirm these speculations.
Source: cointelegraph
Frequent scams
Clients of the unregulated crypto market are one of the most common targets of modern scams. There are several reasons for this, among which are the irreversibility of transactions. Once a transaction is made on a blockchain, it is difficult to undo it, that is, to return funds. Scammers exploit this by promising high returns or selling fake products/services to get money from users. This was probably also the case with BitLucky. What you’re probably interested in is how to effectively protect yourself from these scams. The simplest and best way has always been to own cryptocurrencies on your hardware wallet. In this way, only you have access to your funds, but again that puts all the responsibility on you. If you forget the 12/24 word code or seed phrase, the funds are very likely lost forever.
Source: cointelegraph
Ponzi schemes
The Ponzi scheme is a way of investment fraud that was suppressed during the 1920s. In the 19th century, the U.S. was successfully used by the Italian fraudster Charles A. Ponzi, after whom it was later named. This is still one of the most popular ways of scamming today, especially in the world of cryptocurrencies, which is full of financially illiterate people who expect unrealistically high returns on investment that are not sustainable in the long run. Some examples of Ponzi schemes in the cryptocurrency market are Bitconnect, OneCoin and the last known Terra (LUNA) that realized a value of more than fifty billion dollars, which later disappeared altogether. Time will tell whether the Rijeka company BitLucky was an ordinary Ponzi scheme, or whether it was some other problems within the company.
Source: cointelegraph
How the Ponzi scheme works
Here’s a brief explanation of how the Ponzi scheme works:
“Entrepreneur” announces that he is working on a very profitable project that guarantees high revenues and high profits, but needs a loan, i.e. cash. “Investor” A gives the “Entrepreneur” a loan of 1000 euros with a repayment period of 90 days and interest of 100 euros paid on the 90th day. During these 90 days, “Entrepreneur” finds new “investors”, B and C, promising them the same. At the end of the 90-day deadline, he offers to “Investor” A to return 1000 euros and interest of 100 euros, but also not to raise the principal or interest by offering the same conditions again. He owns money for this purpose because he received funds from “investors” B and C. Most “investors” are greedy and do not withdraw money i.e. reinvested. Individuals who do not believe are paid immediately, from the money he received from others, and this raises the reputation of the “Entrepreneur” as a business and serious person. As time progresses the number of “investors” increases and the scammer succeeds. Nevertheless, after a certain time, due to the unsustainability of the situation and the overall concept, one of the following options occurs:
1. The scammer runs away with the money he has.
2. Defrauded investors for various reasons will ask for their money, and the scammer will be exposed because there is not so much cash to suddenly pay everyone both the principal and the promised interest.
In short, the scheme works by using the money from new investors to pay out returns to earlier investors, creating a semblance of profitability. However, instead of generating real profits through actual investments or business activities, Ponzi schemes depend on a continuous influx of new investors to maintain payments to existing investors.
Source: cointelegraph
Conclusion
Since these (BitLucky) and similar frauds related to investments in crypto assets are common around the world, and now appear in Croatia once again, we warn you not to invest your money in various financial instruments that you do not understand or have not verified authenticity. We encourage you to save your cryptocurrencies on your wallet when you can, so that no one but you has access to your funds, and a great way to safely buy cryptocurrencies is always our Kriptomati. We hope that you enjoyed reading today’s blog, and we would love if you would share your opinion about crypto scams and their appearance in Croatia with us on our social networks (Twitter, Instagram).
