These days it seems like every other exchange is plotting an exit scam whilst they they promise bountiful profits, not to mention the near 80% of ICO’s that are deemed scams. Pure Bit was the perfect storm.
What was Pure Bit?
Pure Bit was to be a South Korean crypto exchange that promoted the use of it’s own native cryptocurrency, Pure Coin, in the exchange by offering rewards for its use. Not only did Pure Bit promise that their Pure Coin ICO would be a bountiful investment, but they encouraged all users and investors on the platform to bring their fellow friends by offering an affiliate program.
If you’re familiar with Binance, then you’re probably familiar with their affiliate program. Pure Bit’s affiliate program was nearly identical in nature where users who referred others using their personal link, earned tokens for bringing them onto the platform.
The company operated anonymously as ICO’s were recently banned in South Korea. Even with ICO’s being banned in the country, it still remains common to invest into cryptocurrencies, so some investors were eager to invest into a new exchange.
Why invest and use smaller exchanges?
Why would you ever want to go through a smaller crypto exchange? The most common and the largest crypto exchanges out there, trade a large volume of coins every day. With these high exchange rates, users often find themselves suffering from high trade fees, slow processing times and even total platform failure if the market becomes to hot.
Smaller crypto exchanges often have low transactions fees, faster service times and almost never a platform failure. Some exchanges even cater to a specific type of traders needs, or promise that no scam coins are available on their exchange. These are things a large exchange would never be able to do.
With there sometimes being positive draws to these smaller exchanges it’s important that you go into them with caution. The immediate thing that should discourage you from using an exchange is if the do not hand out private keys.
The one thing all crypto traders and users alike should know more than anything, is NEVER give out your private key. But what if there’s no private key to give out? Then you’re already in trouble. When an exchange doesn’t offer private keys to access users funds, it means that the exchange and almost anyone can access your assets with ease. This makes it easy for hackers to steal funds and even for the exchange itself to conduct what’s called an ‘exit scam’. That’s exactly what is believed to have taken place on Pure Bit.
How did they do it?
Pure Bit’s ICO was scheduled to end on November 30th 2018 and required a minimum investment of 5 ETH. With some investors eager to get in on the ground floor of such a ‘promising’ exchange, Pure Bit had raised 13,000 ETH ($2.7 million USD) by the time they pulled off their exit scam earlier today.
As so common with exit scams, Pure Bit and all of its internet presence, has since vanished. The website was shut down and removed in the past 24 hours. Investors were obviously infuriated and it has been discovered that their website domain name was purchased under a fake name, giving no leads as to who conducted the scam.
All of Pure Bit’s social media accounts were deleted including its Kakao group chat, but not before making a final post saying “sorry.”
The 13,000 ETH was pulled from all of the companies wallets with no leads as to whom now possess it.
With no leads regarding who conducted the scheme, Reddit user ‘qwerty77077 pointed out that investors have little to no chance of ever recovering the stolen ETH, stating exactly…
“They have gotten rid of every evidence. Website hosted by fake name / out of Korea host/ messenger/contacts were all fake too. Now their only hope is to keep on track with that ether and hope for the best.”
What’s with all the exit scams?
Exit scams are becoming more and more popular these days, and are becoming more and more profitable. The last major exit scam we covered was the Maple Change scam a couple weeks ago. Exit scams typically prey on eager investors who fail to do adequate research before investment. Other times, ICO’s and exchanges can appear completely legitimate investors still fall victim to scams.
The truth is, there’s no perfect and sure fire way to weed out what ICO’s are scams and what are not. ICO’s are high risk investments, and will continue to remain that way as any type of effective regulation towards them is slow.
ICO exit scams have reportedly scammed investors out of over $100 million the past couple years, and that’s a bit of conservative estimate. What’s going to stop the terror of ICO exit scams? We don’t know, so please be careful!