Bitcoin scammers forced to settle with FTC

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Bitcoin has brought about many advances in terms of online financial security, but unfortunately the bitcoin community isn’t free of those looking to make a quick buck, or in this case bitcoin, via unscrupulous means. Developer Ryan Ramminger and Equiliv Investments were forced to reach a settlement with the US Federal Trade Commission over accusations that the company illegally hijacked peoples’ smart phones and installed mining software.

These types of scams have been among the more popular scams bitcoin developers have tried to use. The premise is simple, hijack peoples’ computing power and use it to mine bitcoins. The benefits for scammers is obvious, they can mesh the computer power of thousands of users together to mine bitcoins. All the while, they don’t have to invest in expensive mining equipment or pay for electricity.

As mining as become increasingly difficult, the appeal of mining malware has become all greater.

The “Prized” scam was one of the more clever bitcoin mining malware programs out there. Initially, it was marketed as a consumer rewards app and became reasonably popular on the Google Play store. Secretly, it was installing mining software on peoples’ phones, which were then used to mine bitcoins. Equiliv kept all the proceeds from the mining operations.

The company and Ramminger were required to pay only $5,200 dollars of a $50,000 dollar settlement. The parties involved in the settlement also face decades of reporting requirements to ensure that they do not attempt a similar scam again. While the ultimate settlement was quite low, it should still send a clear message to would-be hackers that the FTC is taking bitcoin scams seriously.

This alone is good news for the bitcoin community. While bitcoin was created to be relatively government-free, some basic government oversight and legal enforcement adds credibility and legal stability to bitcoin. So far, most governments have declined to recognize bitcoin as currency, but have acknowledged that it is something of value and deserving of legal protection.

If you’re interested in taking a look at the full settlement, you can read it here.

Bitcoin scams costing millions of dollars per year

Earlier this year, it was reported that the total amount of money lost due to bitcoin scams had reached $11 million dollars. The study was conducted by scanning through online forums and other resources, so the amount reported should be taken with a grain of salt. Owing to the difficultly of detecting and uncovering such scams, the actual amount of money lost could be much higher.

Further, this total actually excludes malware, pay-for-click sites, and other forms of scams.

Bitcoin users shouldn’t be overly worried, however. Proper precautions can help reduce the risk of being scammed. Exercising caution during transactions, using paper wallets, and creating strong passwords can help protect your bitcoin wealth. It’s also recommend that large holdings be divided among multiple wallets. Never put all of your eggs in one basket, right?

When it comes to downloading software, its advisable to use only established and trusted companies. The risk of malware and other subversive software is higher with newer and less established companies. Generally, internet users are good at uncovering scams if given enough time.

As far as watching for malware, if users notice that their battery life is being drained at an abnormally fast rate, their data usage is very high, or their computer resources are inexplicably being consumed, there’s a chance that some type of malware has hijacked their device and is using the computer power for one means or another.

Users should always keep a close eye on their devices, whether they are involved with anything related to bitcoin or not. The “Prized” scam targeted non-bitcoin users as well as bitcoin users themselves. Many other scams simply don’t involve bitcoin at all, but use computers to send out spam emails, viruses, and other things.

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Brian Booker

An international financial analyst and writer. He has consulted for the Malaysian government, various MNC's, and other organisations. He focuses on currencies, commodities, and emerging South East Asian markets.

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