At the Top of the ICO Scam Pyramid: Giza
It appears that a group of investors has fallen victim to another elaborate cryptocurrency ICO scam. According to a report on CNBC, a suspected scammer or a group of scammers were able to orchestrate a fake ICO campaign that has ended up duping investors of about $2 million. The project known as Giza was able to draw investors in using fake social media resources from both LinkedIn and Instagram to create a false identity for the alleged scammers. More than 1,000 or so investors are reported to have invested money in the Giza project and are now facing the prospect of having their investments lost forever.
Details of the Scam
According to the statements made by several individuals involved in the ICO, it all seems to revolve around an individual by the name of Marco Fike who was the COO of the project. The Giza project was supposed to develop sophisticated cryptocurrency storage devices. In the beginning, all signs pointed to the legitimacy of the project according to some of the investors interviewed by CNBC. However, they soon became suspicious of the project when they stopped getting updates from the development team, and the sole supplier of the project pulled out.
The said supplier, Third Pin LLC, a Russian company confirmed that they had indeed been contracted by the Giza project. However, in a Bitcointalk forum posting dated January 30, 2018, the CEO of the company, Ivan Larionov said that his company had severed ties with Giza. According to Larionov, Fike didn’t inspire confidence during their negotiations, and so he decided to terminate the supply contract.
The Ether Trail
Some of the investors in the Giza ICO say they put in as much as $5,000 and $10,000 in ether. The Giza ICO began in January, and by the start of February, more than 2,100 ETH (about $2 million) had been raised. By the middle of February, people began noticing large outgoing transactions from the Giza project Ethereum wallet. The leakages of income carried on over a fortnight with the final withdrawal taking place on March 2, 2018. There is now only $16 worth of ether in the wallet.
Movement of cryptocurrencies can be tracked since they are recorded on a blockchain. Following the ether trail, it is discovered that the funds were disbursed to multiple wallet addresses. Some of the ether was eventually exchanged on ShapeShift, a cryptocurrency exchange platform. According to ShapeShift, the Giza wallet address that used its services has been blacklisted, but the platform cannot reveal the identity of the owner. The identity remains anonymous because ShapeShift doesn’t collect user data.
Marco Fike, the Alleged Con Artist
In a bid to get to the proverbial bottom of the matter, concerted efforts have been made to unmask Marco Fike, the man in the middle of the scam. Nobody associated with the project knows what he looks like as he communicated via text or voice chat. The information that exists on both his LinkedIn and Instagram pages have been proven to be fake. He also listed false employment records which included Microsoft and an agency in Dubai. Both companies have denied ever hiring anyone by that name.
Presently, both investors and employees are in limbo as to the future of the project. Many of the former employees have said that they weren’t paid for their work on the project. According to Cal Evans, the individual listed as the legal adviser on the project, his firm, Gresham International had cut ties with the project for over a month. Speaking on the scam, he said that his firm was going to do all it can to bring the perpetrators to book.
The ICO market continues to be a highly unregulated “free-for-all” market with little oversight. The unregulated market of ICO‘s leaves investors at the mercy of ICO scams as well as pump and dump schemes. Carrying out a comprehensive due diligence before investing in any ICO is necessary to avoid becoming a victim of the next scam.