Of blockchain, cryptocurrency, and scams – Manila Bulletin

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A few years ago, a friend’s son asked me what I know about bitcoin. “Not much,” I said. “Ah, Tito, I think I could help you,” he said.

He told me about this fantastic company that offered him a monthly 40 percent return on investment depending on the initial amount an investor would put in. He said if I were willing to invest, he would share the profit with me making it a win-win for both of us. He then talked about trading and cryptocurrency, which, when I Googled (while we were talking), came from the website of that company he was telling me about, word-for-word.

“I smell a scam,” I told him. He got mad and, with a disrespectful smirk, said the problem with me is that I’m afraid to try new ideas. He said crypto is the future, and those who will not embrace it will be left behind. He arrogantly told me that the company is a reputable lending company using blockchain and that he only asked me to invest because he needed people to bring in investors who could recruit more people to invest. I stopped him and said there’s a word for that scheme: pyramiding.

Feeling her son’s frustration, the mother told me to trust the boy, invest, and give the 16-year-old kid a chance. I said no. It’s a clear scam. My friend insisted that it could not go wrong, as the boy was promised more than one percent ROI per day no matter what’s the current price of Bitcoin in the market.

As I explained to the boy and his mother the dangers of going into something they don’t clearly understand, I sensed hostility from both of them. The father told me that among all of their friends, it was only me, “na may lakas ng loob” to say that to their son, a techie in the family. The parents eventually stopped talking to me and did not even bother to greet me Merry Christmas in 2017.

In January 2018, the company the boy was harping about announced that it was folding up. Two US State Securities Boards issued cease and desist letters ordering the company to stop and close down its business for running potentially fraudulent operations.

The boy’s US$10,000 investment in 2017 was worth about US$33 in early 2018.

In November 2018, the boy’s parents greeted me “Merry Christmas” via a text message.

Fast forward to November 2022, the boy’s parents got scammed because they listened to him (again) to invest in crypto mining apps that targets users that have yet to learn about trading and investing. They offered two easy-money options: first, without any investments as long as you recruit people to join; and second, put-in money and let the company use it for mining cryptocurrencies.

When the investment turned out to be a scam, the son informed me what happened and, with humility, asked for my advice. Here’s what I told him:

1) Do not believe anyone who promises to double your money in a few days. High-return investments offered on social media are likely scams. Please stay away from it.

2) Unsolicited investment offers from social media and emails are also likely scams. Refrain from entertaining unknown callers who will ask you to invest in cryptocurrency.

3) Do not believe in investment offers with limited time frames. This is a trick to make you decide quickly. The scammers know that many people will make wrong decisions on impulse, so they will pressure you to decide immediately.

Blockchain is a fantastic technology that can do a lot of things that could be helpful to make our lives easier, including the eradication of fraud. However, scammers use it to trick users because not many understand how it works.

You will meet many people talking about cryptocurrency, DeFi, Web3, blockchain, and other internet buzzwords. They will make promises to you to invest in what they offer. Ask them what problem the solutions they’re offering can solve. If they have a solution that’s looking for a problem, then stay away from it.

Final warning: ‘Tis the season when scammers are aplenty. These internet bad guys will do anything to get our hard-earned money. They will target our emotions to gain our trust and exploit our greed to steal from us. # BeFullyInformed. Be careful.

(Art Samaniego, Jr. is the head of Manila Bulletin IT Department and is the editor of Technews.)

 

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