The cryptocurrency market is changing all the time. New tokens are added to the ecosystem daily and some of them are linked to genuinely innovative projects. Others, however, are just banking on the fear of missing out and releasing completely worthless tokens to the public. Worse, there have been multiple cases where the token doesn’t exist, and the investors were outright scammed out of their money.
Investors sank hundreds of thousands of ETH in such ICOs when the Ethereum price was still under $1000. Today, these would be worth millions, if not, billions of dollars.
The crypto community bitterly remembers Bitconnect, one of the worst Ponzi schemes in the space. Thousands of investors were scammed out of their money at the time. And while Bitcoinnect was one of the worst, it certainly wasn’t the last scam of this type. Even fading martial arts star Steven Seagal has been involved in such a scam himself.
In this article, we take a closer look at the token he promoted, the promises made, and how the case unraveled to show that it was a scam all along.
It’s no secret that the original Bitcoin protocol has some scaling issues. Although the network was created to become a peer-to-peer payment system, its design doesn’t allow for mass usage. The network is slow and Bitcoin can handle only 7 transactions per second.
Consequently, many alternative currencies that were released after Bitcoin tried to solve this problem and become a better version of BTC. Some of them succeeded, but none of them managed to surpass the original.
That said, this didn’t discourage the Bitcoiin (with two i) team to release a new token that was supposedly going to replace the original BTC. Bitcoiin 2Gen proposed to become a self-sustaining cryptocurrency based on a PoW consensus model, but on the Ethereum network (!).
Everything about this project raised multiple red flags. Any experienced crypto investor could have seen the scam coming from a mile away. First, the team claimed that they had already raised $50 million in September 2018. For some reason, that wasn’t enough to launch their project.
So, they organized an ICO token sale of 50.000.000 B2G tokens that would be sold for $5 each. Considering the crypto prices at the time, this would have put the project in the top 50 right away.
Another red flag was the referral scheme that they proposed. Each investor would earn passive income depending on their level in the company:
- Level 1: 15%
- Level 2: 10%
- Level 3: 5%
- Level 4: 2.5%
Which eerily resembles a pyramid scheme, where only the ones at the top would ever get their payouts.
And finally, the project was filled with inconsistencies, such as promising mining rewards for an ERC-20 token and having no actual roadmap or project milestones.
Steven Seagal is known for his roles in martial arts movies in the ‘90s. However, his fame has since faded away, and he was grasping at straws to remain relevant. The Bitcoiin team contacted him in 2018 and promised him some of their profits in return for promoting the project publicly.
More precisely, the actor was promised $250.000 in cash and $750.000 in B2G tokens in exchange for promoting the project.
Seagal didn’t hesitate to accept the offer and immediately started talking about the B2G project openly, both on his Twitter and Facebook accounts. His reach was consequential, as he had more than 6 million followers at the time on both platforms combined. Additionally, he participated in a webinar for potential investors.
The promotions were quite successful, as it is believed that around 500 investors were defrauded of $11 million at the time of the ICO. Seagal’s presence on the project gave it just enough legitimacy so that gullible investors would invest despite the lack of fundamentals.
Unfortunately, as many experts feared, there was no blockchain or Bitcoiin token. The scheme was created just to defraud investors out of their hard-earned money and disappear with the profits.
That said, the Securities and Exchange Commission (SEC) didn’t see it that way. Instead, they charged the leaders of the projects for fraud. Additionally, Seagal was equally charged for “aiding and abetting” a fraudulent scheme. Even though the actor lives in Moscow, Russia presently, the SEC requires him to pay $314.000 for violating anti-touting provisions of federal securities laws.
The crypto markets are filled with great projects that can bring fortune beyond imagination. However, this opportunity also brings out fraudsters and scammers that will do anything to make money from impressionable investors. Consequently, always do thorough research before investing in a cryptocurrency. You wouldn’t want to be on the list of victims of the next Bitcoiin or Bitconnect scam.