The cryptocurrency space has unfortunately been plagued by exit scams and fraud ICOs, and it appears as though the latest scam has successfully taken hundreds of millions of shillings from Kenyan investors.
While cryptocurrency investors are often encouraged by the fact that so many corporations and executives are excited about the way that blockchain might revolutionize their sectors, the truth is that there are still massive issues in the cryptocurrency sector with regards to crime and fraud. It appears as though the latest scam to gain traction was a massive Brazilian pyramid scheme that has affected many individuals in Kenya.
About the Scheme
The Brazilian individual behind the scheme is a man known as Ricardo Rocha, the founder of a company called Velox 10.
The company has been operating in Kenya since September 2017. The timing is important considering that this was right before bitcoin reached its all-time highs during the famous cryptocurrency bull run that took place in late 2017.
The company promised unrealistic profits to those who participated. Users had to pay a membership fee, and an upgrade fee, both of which amounted to Sh 30,000 (the equivalent of about $300) – but Velox 10 claimed that thousands of U.S. dollars in profit were possible daily.
The amount of profit that investors would receive depended on the fees paid initially. Others were promised unrealistic returns of 30 to 50 percent monthly, as well.
Pulling the Plug
Unfortunately, it appears as though Velox 10 has all but disappeared.
Specifically, the website has been closed, which means that thousands of Kenyan investors are forced to face the fact that they cannot retrieve their cryptocurrency holdings. The domain is even currently for sale, as well.
Interestingly enough, it appears as though some individuals seemed to understand that the company was a pyramid scheme, and filed a lawsuit claiming such. The suit alleged that the company wasn’t even licensed to collect money in the first place, and tried to urge the Hotel Intercontinental to evict the company. These efforts were unsuccessful, and it is believed that there might have even been some level of extortion involved.
The entire pyramid scheme is quite similar to the Bitconnect fiasco, a massive cryptocurrency Ponzi scheme that is still being investigated to this day.
The entire scandal has been a disaster for those who hope that the cryptocurrency sector is indeed legitimate. BitConnect is well-known as possibly the worst cryptocurrency Ponzi scheme in recent memory. Similarly, Velox 10 promised more profits to those who could bring other investors in.