Some 120,000 Bitcoins are reportedly in jeopardy as a popular Spanish trading bot glitches and customers can’t access their funds.
Spain-based trading software development company, Arbicorp, recently halted the activity of a trading bot. The decision affected more than 32,000 clients who once deposited their money on that platform and now cannot withdraw it.
The Arbistar 2.0 trading bot offered 1% daily returns to anyone willing to invest at least 3000 euros ($3500). It also offered bonuses to those participants who got new referrals.
Did the Pyramid Collapse?
However, as with any scheme of this type, the breaking point has come. According to the company, an “error in the bot’s configuration” led to customers earning more than they should. However, the sudden halt, the inability to get out, and the losses of new investors are all characteristics of a pyramid fraud scheme:
“It is no longer possible to make contributions from the platform and all accounts are frozen without the possibility of reinvestment. Profits from this saturday, September 12, have also not been paid, and all withdraws have been stopped (…) Cusotmers of our community bot have collecting more during the last year of the platform compared to what was really being produced in the arbitration market with their Bitcoins.”
The research firm, Tulip Research, estimates that investor losses are around $1 billion even though no official estimates have been released yet:
However, the company assures that it will pay all investors and maintains that its trading bot was a reliable product and not a Ponzi scheme – although, in the press release, they announced that they would not pay those who dare to take legal action.
Why do People Keep Falling for This Kind of Scam?
These scams are rampant in the crypto ecosystem, but there are always incautious people willing to take risks. Promises of quick profits and high returns are often too attractive for victims to think twice.
In fact, in early 2020, the Better Business Bureau ranked cryptocurrencies as the second riskiest investment ever. 32% of the scams involved the purchase of cryptocurrency; 23.4% had to do with digital assets as an investment opportunity; 31% were linked to the Chinese C2CXr shady exchange.
Manuel is one of those affected. He invested 7,000 Euros in the project and explained to the Spanish news website El Diario that it was all about securing the future in times of crisis:
“Why do I get into these messes? It is impossible to have a family or buy an apartment today in Spain. Now I work in Dublin, I earn something else, and I thought: I’m going to invest it to see if I can buy a house tomorrow,” he regrets. “In the end, you are looking for money and a future.”
Let’s hope that after the disaster, at least victims can secure their present