red 
This week, news reports emerged that apparently expose a purported crypto trading bot application – dubbed the “iEarn Bot” – as a crypto scam of historic proportions. The app is heavily advertised in Nigeria, Vietnam, Cambodia, Indonesia, Romania and Latin America, allegedly investing victims in Tether USDT or USD Coin for significant profits.
Here, Elliptic’s research and investigations team digs into these claims and provides warning signals to prevent investors from falling prey to similar scams.
What is the iEarn Bot Scandal?
In a manner commonly seen in cryptocurrency trading scams, iEarn Bot recently increased the commission on withdrawals and apparently stopped processing them altogether. This is a classic indicator that fraudsters are about to shut down their operations – also known as “pulling the rug” – and start laundering their cryptocurrency.
A BBC investigation found the company’s website had a number of red flags, including listing a person who had never heard of the app as the company’s founder. The Massachusetts Institute of Technology (MIT), Huawei and Qualcomm have also denied working with the company, despite it listing them as a “strategic partner”.
iEarn Bot website, with noticeable formatting and grammatical errors that serve as a red flag for a scam.
How big of a scandal is iEarn Bot?
In response to reports that the iEarn Bot may represent “one of the biggest crypto scandals in history,” Elliptic conducted its own investigation into the scam’s blockchain infrastructure. We found that deposits and withdrawals of USDT and USDC victims are mainly serviced from three addresses on the Ethereum, Tron and BSC networks.
Together, those addresses processed $6 million in invested cryptoassets and received over 55,000 deposits – making iEarn Bot far from a scandal of statistical significance. iEarn Bot’s promises of AI-based trading were also similar to other notorious ponzi schemes such as Finiko and Plustoken, which defrauded investors of $1.5 billion and $800 million respectively – amounts far greater than iEarn bot.
Elliptic’s crypto-intelligence capabilities work to maintain the world’s leading proprietary dataset of crypto-based illegal activity. This ensures that virtual asset service providers and law enforcement investigators will be able to track the laundering activities of illegal entities such as iEarn Bot.
However, it also allows the discourse surrounding certain crimes to be fact-checked and scrutinized against the transparency provided by blockchain transactions. This ensures that the recent positive global contributions of cryptocurrencies – ranging from raising over $212 million to aid Ukraine to facilitating earthquake relief in Turkey – are not wrongly overshadowed.
Although relatively small in the larger context of the crypto scandal, iEarn Bot highlights a key issue. For many, this app has probably robbed them of their life savings. This is especially the case in developing countries, where the company claimed to have over 800,000 investors in Indonesia alone. However, scams like iEarn Bot show no signs of abating. YouTube “investor” accounts that once promoted iEarn Bot are now promoting other unverified trading apps that boast many of the red flags that iEarn did.
Elliptic’s wallet verification and blockchain investigative tools give investigators the ability to track a fraudster’s money laundering strategy, potentially allowing illicit assets to be seized when they track down a compliant VASP. For defrauded victims, such investigations can provide at least some financial reprieve. However, noting that prevention is often the best medicine, we provide some indicators of crypto investment scams to look out for – potentially allowing victimization to be avoided entirely.
iEarn online and smartphone based applications.
Red Flag Crypto Investment Scam
- Websites that claim an unrealistic return on investment.
- Websites that have similar user interfaces (UI) to other – seemingly unrelated or confirmed scam – websites. Many scam rings operate multiple scam sites. They run either simultaneously or one after the other, all using the same backend and frontend with only minor name or color scheme changes.
- Websites that post articles of incorporation or registration documents on their home page. Although intended as a sign of legitimacy, this has ironically become an indication of the opposite. Many jurisdictions charge very little to register a company, which means it’s easy to get, and the documents do not indicate corporate legitimacy.
The iEarn Bot website lists four official documents in an attempt to legitimize itself.
- Obvious formatting or grammar issues. This indicates unprofessional web design or marketing teams.
- Insisting on payment processing. One obvious red flag of a scam is a website that does not process withdrawals of apparent earnings or investments. Some scammers will therefore circulate fake emails purporting to contain withdrawal confirmations from their sites, with the aim of lulling victims into a false sense of security. In some cases these will be obvious fabrications, for example claiming that a withdrawal was processed to a crypto address that does not exist.
Two emails from different but identical scam sites – advertised on Facebook – claim to process payments to fictitious Bitcoin addresses starting with “5” and “4”. Bitcoin addresses can only start with “1”, “3” or “bc1”.
- Aggressive and frequent marketing emails. They are often written unprofessionally and try to induce “fear of missing out” (FOMO) after signing up. Such emails will also often not have an unsubscribe option.
- Stock images used to indicate company headquarters or senior management team. Reverse image searches on mainstream search engines can determine whether images have been used before or appear on image providers.
- Senior management team they don’t have any professional online presence. Or, they may have blatantly fabricated LinkedIn profiles claiming minimal (or overstated) past professional experience.
- Claims of affiliation with reputable corporations where no specific information is available. Many scam sites will claim to have partnerships with large corporations. If legitimate, additional information should usually be easily found on tech industry news sites or on the purported “partners'” own websites.
- General poor marketing on social media platforms like Telegram and Facebook.
Contact us to learn more about how our solutions can help detect and prevent fraud in the crypto space. Click here to schedule a demo of Elliptic Nexus, our suite of blockchain analytics solutions.
