Ever since cryptocurrencies evolved, scams have been part of them, People have lost millions to on-line scammers. Just six months into 2020 and victims have already lost over $1.4 billion, according to CipherTrace.
The firm in its Spring 2020 Cryptocurrency AML and Crime Report notes that if the trend continues this way, we could cross the $3 billion mark by the end of the year.
That’s quite a considerable number, but it will be no match for the $4.5 billion lost in 2018 through various scams that ranged from fake ICOs, overnight exchanges, fraudulent wallets, pyramid schemes, phishing, impersonation, unregulated brokers, automated trading systems, pump & dump online groups, counterfeit emails, social media engineering and many more.
The report notes that this year things have been different due to the ongoing coronavirus narrative, although unfortunately, scammers have been quick to capitalize on by duping good Samaritans under the guise of donations or health charities.
As if the scams mentioned above are not enough, I have discovered a new one that I believe needs highlighting to anyone involved within the cryptocurrency industry. This new scam targets crypto projects with the hopes of tarnishing their names unless they agree to be extorted.
I will overview one of the cases called Blue Hill Mining. A company that had been held to ransom by an organized network of scammers. Blue Hill
Mining disagreed with complying with their demands, the criminal syndicate then resulted in structured continuous defamation, stopping at nothing until they had tarnished the company’s reputation.
Attacks were conducted through social media channels: YouTube, Telegram, etc being but their main choice of attack being through the BitcoinTalk forum. After months of slandering the project and blackmail which BHM repelled, the conmen dedicated time in writing defamatory articles and employing SEO services that flooded any searches associated with the company with scam tags and warnings to investors.
The continuous attacks did result in psychological torture to some senior members of Blue Hill Mining who left the project due to their reputation being dragged in the mud. With that, the defamation has also affected investor confidence in the company that has been on track to deliver on its promises
Blue Hill Mining’s aim is to create an integration of the traditional mining industry with today’s technology, thereby creating opportunities for the average person to access and benefit from the mining industry using the blockchain.
When the company launched operations last year, a certain Jofor Humani on June 1, 2020, published a damning piece about the project on cryptoinfowatch.com, where he scrutinized the company STO offering, White paper and team members warning investors from partaking in the STO.
This kickstarted what was a well-structured assault from multiple platforms. The article was followed by a post by Crypto-Info on the Bitcointalk forum, where he scrutinized the STO further. At the time, Blue Hill Mining didn’t have the regulation of FINMA under the jurisdiction they were operating in. Regardless, the company had made it clear that the STO wasn’t regulated at the time, and they were working on sorting the issue.
So, this information was available for all investors publicly, and by no means was it compromising the integrity of the project. The problem was the attacks begun before Blue Hill Mining started the regulation process, and this led to the company being flagged by FINMA complicating the process.
When team members reached out to Crypto-Info to understand his motivation, he referred them to the LAWMUC, where they were to make their denouncements.
LAWMUC, which goes by the alias BGADVOKATS aka Kanzlei Herfurtner, aka RECHTSANWALT-FILIPPATOS. Through my investigation, I found out that the perpetrators change the names of the law firms once they have swindled unsuspecting clients.
I found that LAWMUC was under investigation by the European Crime Prevention Network after scamming several victims through legal fees with the promise of pursuing legal proceedings against legitimate financial and investment companies.
The law firm looks like it is a part of the network of scammers who work in unison to delegitimize projects with slander, half-information, and misinforming documents. All this is done without any sufficient evidence other than that of its own “criminal network”. You can check more details on BitcoinTalk here and here.
Members of the criminal enterprise ensure they join communication channels of targeted projects like Telegram. Then the likes of Crypto-Info and YouTubers like Mr. Davidoski get to work by creating defamatory content on various platforms, thereby creating tension and distrust among investors. Then LAWMUC and a few other associated fraudulent law firms with the same owners (Vladislav Dimitrov and Neshe Filippatos) contact people on communication channels through private messages.
It is to be noted that Davidoski (see his YouTube channel here where he attacks various projects) whose real name is David Hernandez Anfruns is a Spanish resident who is a singing teaher by profession. He is "stalking"one of the Blue Hill Mining team members. The attacks include more than 20 puerile videos joking about him, defamation of character, attacks on his religion, his body shape, etc. The vast efforts involved just to attack one team member reflect the time and effort they are willing to resort too in order to achieve their goal. Important to note that David claims that he "never was in contact with this Lawyers Firm".
Those targeted included individuals who buy in the slanderers' half-truths and inform them that they know of a law firm/s that are forming a fraud case against the targeted company.
If an individual pursues the lead and contacts the law firms, they are asked if they are already invested in the project and how much they have. Then the individual is informed that the law firm is already at an advanced stage, and if he/she wants to participate in the class action, they have to contribute some money since the legal process is costly. The individual is then asked to share all the necessary information after they have made the payment. After this, the person is promised to be compensated whatever they had invested in the targeted company.
However, once you pay, that will be the last time you will be hearing from the law firm or its members.
Unfortunately, not content with scamming investors from their hard-earned cash, they then privately contact the targeted company and ask for a ransom in exchange for their silence
Last month Laura Marthel who works as an external collaborator with the Cyber Security Department of Interpool alongside the European Crime Prevention Network issued a warning on the BitcoinTalk forum about the fraudsters warning all users about getting involved with them and also informing them of an ongoing investigation. She notes that authorities had taken an interest in the forum, which was acting as a platform for defamation and was being utilized by several malicious actors to sway the opinion of users before defrauding them.
Marthel shares an email written by Mario Kroos, who works with the European Crime Prevention Network.
Kroos notes that crimes in the legal sector have exploded in 2020 with a recent annual survey of the top 100 law firms in Europe, showing that almost all of them had suffered a cybersecurity incident.
"There is a "law firm" called LAWMUC (aka. BGADVOKATS aka. Kanzlei Herfurtner aka.RECHTSANWALT-FILIPPATOS) that is under serious investigations by the EUROPEAN CRIME PREVENTION NETWORK for scamming clients regarding crypto projects, in partnership with the "law firm" Kanzlei Herfurtner, under serious scams for both projects and clients. These law firms are being advertised via different users in different forums as in this one, by attacking different projects of both private and public interest."
"They falsely advertise that they will help you take legal action against you, then take your money and run away. Commented Jurgen Wener, a retired professional who is represented by the Herfurtner law firm. The European Crime Watch department contacted such law firms without success, and all emails were not answered, or there was no comment. A reporter only visited their offices where he found only ignorant ones."
Now he says German authorities are working on arresting the fraudsters.
"German officials and authorities have been notified of Kanzlei Herfurtner and action is being taken not only to stop this type of fraud from happening again, but to shut down the operation which has stolen thousands of euros from helpless victims."
"Mock law firms are simply fakes that pretend to be real law firms or are completely fictitious and use the trust of the law firm to exploit unsuspecting consumers. Fraudsters clone websites, steal logos, use the identities of members of the regulated legal service and pretend to be real law firms through sophisticated social engineering techniques. In the past three months alone, the European Crime Watch has alerted the public to 9 fake websites that claim to be regulated companies. Scams can include intercepting information during a transaction before attempting to change details such as bank details to complete the fraud and steal huge sums of money."
According to a review aggregator, Sitejabber, Kanzlei-Herfurtner has a rating of 1 out of 5 with many past clients, all seemingly quite dissatisfied with their services. One client who goes by the name Jonas expressed his disappointment after paying to get assistance with his case only for the lawyers to bail out. He sent them numerous messages via email and didn't receive any response.
"I wholeheartedly believe this law firm is a complete scam. They falsely advertise that they will help you with legal action against, in my case a legitimate wealth management company, then they take your money and run."
It’s easy to Google feedbacks from other victims, for example, Josefa Gonzalez writes: “First they give you information as if they were professionals, so they gain your trust, ask you for money in order to win your process, but in the end you lose everything. Scammers!”
Based on my investigation, I realized that people ought to be aware of this well-organized criminal enterprise that cons unsuspecting investors.
All of these parts from the original law firm Kanzlei Herfurtner, which is a fake firm based in Germany, they use stock photos of lawyers that exist but based in various countries with the exception of Wolfgang Herfurtner. Scammers also have a real law firm with the same address called Dr. Greger & Collegen.
BHM team also shared with me a few screenshots of extortion that were sent to a member of the BHM team through Telegram.
Even though many past scams are get-rich-quick schemes, this latest scam is a pro-longed and well-organized one with bad actors working together to defame a project by using the project's small early-stage "teething" problems as a gateway to commence their coordinated attacks.
You have to bear in mind, the likes of Ethereum, Tezos, and Tron, for example, were all called scams in various degrees before coming to reputable companies. Blue Hill Mining showing by their actions that the company is correcting its initial mistakes as well announcing improvements including the adding of 4 more mining licenses to the project, you can check it here.
Most of the attacks are going through the BitcoinTalk forum as it's a free forum for anyone without the need of showing your id or proof of your identity. So it's easy to begin these kinds of scams. Thereby, I believe everyone should be more vigilant and conduct extensive research on whose information they chose to believe and who they seek help from.
I will continue to investigate the situation until all the details about the scammers will be revealed, and all attacks on their victims will stop.
If you were a victim of similar scam schemes, please contact me and describe the situation. I would also ask you to contact me if you have any additional information about the scheme and the people who were involved.
My email firstname.lastname@example.org
(Disclaimer: All Information sourced in this story was provided to the author by Blue Hill Mining)