BitCoins & Pyramids

Scams abound when money’s around

It was a beautiful, warm and sunny day; a rarity in the Netherlands for April. Gleefully talking hacking shop with a recently acquired friend, sipping iced coffees. When the table next to us asked to make an introduction. This is not unusual, especially in Amsterdam where space is tight. If you’re eating at a cafe and spare seats are available at your table, many times it’s an expectation to share the spot. Strangers engaging in conversation is typical on a sunny day.

We will call our two “MLM” sales people Drusilla and Martin.

Introductions

“Do you mind if we ask what you two do?” she said in flawless English. I am always impressed how fluidly the Dutch move between multiple languages. “your conversation sounded interesting”

As two hackery types who value privacy. We responded we were security researchers. This is easier than….scaring people by saying “that” word: Hacker.

“I’m Drusilla, we work for a technology company. We deal with the BlockChain. Martin. “ Pointing to her partner at the table, “Why don’t you tell them what you do?”

The Proposal

“We have servers through out Europe. We use the newest hardware. Other companies try to sell you older systems that don’t mine anymore. We use the newest ASICs. Do you know what they are?” asked Martin.

“Yes”, then the nerd in me began to describe why new ASICs were important as the coin pool gets smaller.

Martin began to fiddle with his phone, while Drussila began to talk to my companion in Dutch. She was finding out more about him.

“Ah, here, pictures of one of our data centres in Switzerland. We also have machines in Iceland, the electricity is cheaper there. You pay a monthly fee and we guarantee you’ll make your money back and then some.” Martin said with confidence as he leaned back in his slick suit, pleased with the start of his sales pitch.

“Martin is a Diamond level! Said Drussila. “you could be too!” she said excitedly to my companion who is Dutch of Asian decent. “If you talk to your people, in your community. The more people who sign up with you, the more money you can make.”

Different levels, people signing up under you to make money: “MLM”

In my head the mix of slick suits, levels, taking about singing up people under you, discussing taking advantage of a person’s ethnic community group. The alarms went off.

“So, is it like a turnkey solution?” asking in a round about way to clarify.

“Oh yes, you don’t have to know anything about technology. We are the experts. You only pay a monthly fee and we take care of everything. The more people you add to your network, the more money you can make.“ Martin then began to describe a multi-level-marketing scheme that sounded exactly like a pyramid scheme.

What is the big difference between a multi-level-market and a pyramid?

It takes research to avoid getting scammed

According to the U.S. Federal Trade Commission legitimate MLMs, unlike pyramid schemes:

“have a real product to sell.”[9] “Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s probably not. It could be a pyramid scheme.”[10]

1. An MLM makes something or produces a service, a pyramid does not. The company Martin and Drussila were pushing doesn't make anything and doesn't own anything. They act as a a supposed middle-man for Genesis Mining services, but aren't listed anywhere legitimately associated with Genesis.
2. Genesis Mining was asked to comment on this story and responded promptly: “OMNIA is a customer of Genesis Mining. They buy hashpower from us. Apart from that, we do not have any other official partnership or association with them, and thus we are not responsible for their operations.” — Charlize, Genesis Mining Customer Service
3. Anyone can directly sign up to Genesis Mining, no MLM/pyramid/middleman is required. You don’t need to sign up with a company touting to be a “OMNIA proud partner of Genesis Mining”. There is zero guarantee if you pay a MLM company to use Genesis mining, they won’t keep your money without mining any coin.
4. The “OMNIA proud partner of Genesis Mining” MLM company had no buy back program at time of termination. An important distinction because they don’t make anything.
5. The levels in “OMNIA proud partner of Genesis Mining” are built upon direct referrals, with levels becoming more unattainable but luxurious. There are two “legs” left and right, Each leg, also referred to as a stronger and weaker leg. Must meet certain criteria to make a level or move up. The weaker leg is the one with less mining and referrals.

Left leg is Sam & right leg is Jane, looks like a pyramid eh?

The 2-Up System

Hallmarks of a pyramid scheme is doubling or 2-UP referrals. Using examples from The Mathematics of a Pyramid Scheme — The Scam Explained

“ In the 2 up System, the “sales income” from the first 2 people you recruit goes to the person that recruited you. The sales income from the 3rd and each subsequent recruit you obtain goes to you, along with the first two “sales” of each of your recruits, as shown below for a system priced at $1000 per sale. This system is very popular because the income levels for the person at the top can grow exponentially. Also, there is tremendous incentive for each of your recruits to pursue that 3rd sale, since this it the one that has potential to create a lot of income.”

2-UP pyramid scheme

The Levels

In the case of “OMNIA proud partner of Genesis Mining” levels. They start out small but turn rapidly into what looks like a modification of the 2-UP pyramid scheme.

Begin the “MLM” doubling because it’s not a pyramid scheme…

To make each level, there are minimums. I stress, these are minimums.

1. Level 1 Bronze Executive: 1 referral in each leg, left and right with a minimum of $500 in mining in each of the two legs= two referral, two people total. Bronze Executive = 2.
2. Level 2 Silver Executive: 2 Bronze Executives, 1 in each leg, left and right with a minimum of $5000 in mining in stronger of the two legs and minimum of $2500 mining in the weaker leg= four referrals. Silver Executive= 4 (2*Bronze).
3. Level 3 Gold Executive: 2 Silver Executives, 1 in each leg, left and right with a minimum of $15000 in mining in stronger of the two legs and minimum of $7500 mining in the weaker leg. Gold Executive = 8 (2*Silver)
4. Level 4 Platinum: 2 Gold Executives, 1 in each leg, left and right with a minimum of $30000 in mining in stronger of the two legs and minimum of $1500 mining in the weaker leg. Platinum= 16 (2*Gold)
5. Level 5 Sapphire: 3 Platinum levels, minimum 1 in the weaker leg with $60K in stronger leg & $30K in weaker leg. Sapphire = 48 (3*Platinum)
6. Level 6 Ruby: 3 Sapphire levels, minimum 1 in the weaker leg with $120K in stronger leg & $80K in weaker leg. Ruby = 144 (3*Sapphire)
7. Level 7 Diamond: 4 Ruby total, minimum 2 each leg, $400K in stronger leg & $200K in weaker leg. Diamond = 576 (4*Ruby)
8. Level 8 Blue Diamond: 5 Diamonds, minimum 2 in the weaker leg, $2 million in stronger leg, $4 million in weaker leg (might be typo on their slide). Blue Diamond = 2,880 (5*Diamond)
9. Level 9 Black Diamond: 6 Blue Diamonds, three each side, $6 million stronger leg, $4 million weaker leg. Black Diamond =17,280 (6*Blue Diamond)
10. Level 10 Crown Diamond: 7 Black Diamonds, minimum 3 in the weaker leg, $10 million in stronger leg, $8 million in weaker leg. Crown Diamond = 120,960 (7*Black Diamond)

Upper levels of the “MLM” 2-UP looking pyramid scheme

Who is OMNIA Limited?

The website for the company lists four addresses, the first one a registered company called OMNIA Limited at 13/1 Line Wall Road Gibraltar, GX11 1AA, United Kingdom. Contrary to the information listed on the website, there is no company on record at this address called OMNIA Limited. However, as luck would have it. Every company in the UK can be easily looked up and researched, for free. The OMNIA Limited from Gibraltar is misusing a legitimate UK business with the same name. The real OMNIA Limited is located in Plymouth, UK , registered since 2004.

All companies in Gibraltar are registered in the United Kingdom

Will the real OMNIA Limited please stand up

Reddit users have already listed the company OMNIA Tech, same as OMNIA Limited as a SCAM. The URL from the Reddit/r/Cloudmining is the same as the fake OMNIA Limited. The business card “Martin” gave me, uses the Genesis Mining name and logo.

Yep, looks like I’m not the only one who thinks this is a scam

SCAM Double Down

The fake OMNIA Limited was somehow able to get photographs, spend the day and attend a dinner with the former President of Armenia, Serzh Sargsyan and two of their corporate officers. No joke. Under the guise of “This enormous facility has the capacity for over 120,000 miners and will become the single largest mining farm in the world.” in Armenia.

You heard it here first folks, breaking news: “single largest mining farm in the world” is being opened in Armenia.

This looks like it could possibly be an MLM scam inside an MLM scam inside an MLM scam. The CEO Milan Sormaz is listed as coming from other MLMs, the last one FG Xpress, another possible scam. This company is associated with another possible MLM scam called ACN. However according to ACN News’ (owned by ACN) article What IS A Pyramid Scheme A SCAM. ACN is not a scam, so just trust them…yes…sure thing. ACN once paid Donald Trump $400K to endorse them, must be legit. ACN is so popular, the company is featured under Scheme Alert! on PyramidSchemeAlert.org.

Scammer level = Armenian President

How much did they pay for endorsement & access?

Conclusion

If you’re turning your friends into a sales opportunity, it won’t end well

The “MLM” company posts on Linked-in, has written “press-releases” for numerous “news” looking websites which are paid marketing fronts. The mathematics however, appear to show this “MLM” is a pyramid. The company sort of looks legitimate whilst focusing on certain ethnic, religious groups and people who aren't that familiar with digital currency mining or the associated technology. Sadly, the slick “Drussila” and “Martin” gave up on me. I gladly, was not the easy mark they wanted.

Does that sales pitch seem too good to be true? Especially coupled with luxury vacations, confusing maths and multiple levels. Do some research.

Unfamiliar with BitCoin and digital currency technology but want to learn? Research and be prepared to loose whatever you invest. This includes all higher risk investments, no matter what they are. Yes, you can make money, but even banks can rip you off if you don’t have a basic level of understanding where you are putting your hard earned money. Only you have your best interest at heart when it comes to your money. Unless of course you think you can sign up 120,960 people.

Parody account Tweet, the real Serzh Sargsyan resigned amid controversy April 2018

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