Anatomy of a Small Scale Cryptocurrency Fraud: BCNEX

ThE uLtiMaTe bLoCkChAiN tRaDiNg pLaTfOrM

It’s May 1st, 2019, and if not for a very strange interaction online, the day would continue to be forgettable. Unfortunately, or fortunately, a friend of mine, Kyle Gibson, decides to interact with a cryptocurrency shilling account on Twitter. His statement, “This looks fucking stupid,” is derided by someone calling herself, “CryptoChii.”

Kyle does not take it well, and he gets, what people in the online community call, ratio’ed, or BTFO (his replies get no love):

Kyle losing on Twitter, but is he though?

Kyle can’t wrap his head around the idea that the tweet, “Be respectful boy,” in and of itself disrespectful, could immediately ravage his reply. It continues to haunt him for days.

[embed]Will the Cryptocurrency Industry be Dead or Alive? | Data Driven Investor In early September, we had a debate within X-Order about the future of the token market. Interestingly, our views are…www.datadriveninvestor.com

So a few of us jump into the thread to enjoy the ratios (notice we don’t begin the replies until at least a week later, but all of the tweets still receive likes and retweets):

Something is drastically off. While tweets can get traction for a few hours, or sometimes, if you’re lucky, a few days, these replies to a tweet from a week previous are getting undeserved attention.

Twitter Propaganda and Scams Operate the Same (because they’re the same)

Anyone who was on Twitter a few years ago is familiar with Geoff Golberg. Geoff has done an extraordinary job identifying how clusters of bots and Twitter account farms are utilized to spread messages quickly and efficiently throughout the medium and directly into your face. Basically, many of us are being socially manipulated to see topics and concepts that would otherwise never garner an ounce of attention.

This is identical to how cryptocurrency scams operate. Don’t believe me? Look at the replies to any Elon Musk tweet:

Two examples of fake giveaways of cryptocurrency found beneath Elon Musk and SpaceX tweets. The scammers have since gotten slightly more sophisticated, responding with images that don’t have clickable hyperlinks, instead relying on the gullibility of Twitter users to type in the address themselves.

These fake giveaways instantly accrue hundreds of likes and retweets, along with an occasional reply, such as, “Wow!1 It really worked!!1! Thanks Elon!” all in the hope that someone who just got involved in cryptocurrency will mistakenly fall for such an obvious scam.

But these are very small time, unsophisticated scams. If you have any business acumen whatsoever there are better ways. Enter BCNEX.

In late 2018, BCNEX dot net shows up on the internet. The message that appears is the following:

Message translated for English speaking audience

Soon, the site, with logos and branding, is properly up, with a whitepaper (that is no longer available) and “one pager,” to boot:

BCNEX’s Twitter page is filled with ridiculous giveaways and airdrops, promotions within promotions and nonsense. They “announce” an incorporation — but where is this “Vietnamese Exchange Platform and Token” incorporated? Where else but… Belize? At, of course, an address known to be an incorporation address for shell companies, proven via the Panama Papers.

Cointelegraph, the cryptocurrency ““news”” site, provides paid advertising for BCNEX in May of 2019:

Whatever the fuck “faster than its rivals” means

The whitelabel exchange (an exchange that doesn’t create its own trading platform but purchases one from a developer) and its token have reached the peak of their audience reach and the peak of their value.

The Inevitable Exit

By the end of 2019/beginning of 2020 users in the BCNEX Telegram, users on Twitter, and users on BCNEX’s Facebook group begin to complain of the inability to withdraw their cash and cryptocurrencies.

The team assures them it’s simply the site going under maintenance.

Here’s the site four months later:

Four months of maintenance should be one hell of an upgrade

How the Scam Works

If you need a too long; didn’t read version, here’s how lower-tier, but somewhat sophisticated cryptocurrency scams operate:

Step 1. Look for local investors who you will be able to pay back quickly.

Step 2. Use injected cash to purchase a website developer, a logo and graphic designer, a whitelabel exchage, and an ERC-20 token developer.

Step 3. With this up and running, sleek website, you can show investors how quickly progress has been made. Investors will likely either re-invest, or invest even more (for equity!). The ICO goes global.

Step 4. With new suckers and new money entering daily, the executives can throw lavish parties and conferences. These accomplish multiple goals, one being showing their wealth and accomplishments, and two being they meet new investors and suckers at the party.

Step 5. Once the initial hype is gone, you close shop, never to be heard from again. If you’ve ripped off just the right amount of not-so-powerful and not-so-rich individuals, you’ll probably get away scot-free.

Simple, always around, and new ones popping up everyday.

Stay skeptical, friends.

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