The Dark Side of the Crypto-Universe
The crypto world is full of scams and fraudulent systems, unfortunately. The Austrian COINTED seems to be one of the most aggressive players in this “dark” side of the crypto world:
- COINTED founder Christopher RIEDER is listed as a suspect in the Crypto-Crime Scene around OPTIOMENT, where allegedly thousands of investors have lost up to EUR 100 million (amount currently uncertain)
- COINTED was the payment partner for the fraudulent crypto-scheme OPTIOMENT. COINTED’s crypto-ATM’s were used to exchange investors’ FIAT money for bitcoins and transfer them into the OPTIOMENT network.
- Since OPTIOMENT apparently also involved untaxed funds on the part of the investors, the OPTIOMENT could also be classified in the close range of money laundering. Anyway, the procedure around the crypto-ATM’s was not KYC/AML-compliant, so one hears.
The Austrian national broadcaster ORF reported in detail about the OPTIOMENT scandal and also about the extend of a possible involvement of COINTED and its founder (see video here).
Late, however, the police raided at the COINTED office in April 2018. The result is not yet known. This is not surprising, as crypto-crime cases are very complicated. For example, there are no verifiable bank details.
The long business trip of the COINTED founder
In the course of the OPTIOMENT scandal, COINTED founder Christopher RIEDER went on a long business trip, his lawyer said in April 2018. At this point, one may ask oneself why the public prosecutor’s office is not taking more consistent action against RIEDER.
Of course, the presumption of innocence applies, but just as naturally the special possibilities of the darkening danger in the environment of cryptocurrencies and blockchain should be considered here. In the circumstances given, investors protection should be the hightest priority.
The COINTED ICO as a Potemkin’s Village
In Q4 2017 COINTED conducted an Initial Coin Offering (ICO), allegedly raising more than $4 million from investors through the issuance of their Ethereum-based Cointed Tokens (CTD). Actually, they wanted to raise more than 100 million from ICO investors, but that didn’t work out. At the time of the ICO, some people and partners had already accused COINTED of fraud, but thanks to a friendly “alternative news” campaign done with the rather uncritical Austrian medium “Brutkasten”, it was possible to continue with the ICO at least. Unfortunately, meanwhile most of the allegations raised turned out to be true.
In version 1.0 of the ICO white paper, investors were simply lied to about many circumstances. COINTED initially claimed that it had taken over the company Crypto Unity OG and thus had its own “green” crypto-mining. Crypto Unity OG was a crypto-mining scheme raising funds from investors to acquire crypto-mining equipment. Those investors had contracts with Crypto Unity OG which we have seen.
Another Crypto-Mining Scheme?
Despite COINTED’s false presentations and warranties in their white paper, it turned out that there, in fact, was no takeover and that the company Crypto Unity OG never did and still does not belong to COINTED. White paper and public information were simply false and misled investors.
It turned out that the alleged COINTED co-founder Charli AHO was also 50% shareholder of Crypto Unity OG which operated a crypto-mining scheme raising money from investors to buy crypto-mining equipment. Crypto Unity OG had a similar business model to INVIA GmbH, whose operation was recently prohibited by the Austrian Financial Market Authority (FMA). Crypto Unity OG has also worked closely with the Austrian company WACHSENDE WERTE GmbH & Co KG which introduced investors to Crypto Unity OG resp. bought themself mining hardware from Crypto Unity OG.
The remaining 50% of Crypto Unity OG belong to an investor who knew nothing of the alleged takeover by COINTED in the first place. When confronted with the situation, Charli AHO promised to this investor to pay him out. This didn’t happen until today and hence the Austrian commercial register still show Charli AHO and his partner as the company’s shareholders. It turned that Charli AHO, without the consent of its partner, quietly and illegally relocated the crypto-mining business of Crypto Unity OG into the COINTED network and apparently received its 25% stake in COINTED LTD in return. A criminal complaint of the Crypto Unity OG co-partner was the result.
Hence, the COINTED white paper was changed and suddenly it was the Swiss company SWISS CRYPTO GROUP AG, which supposingly is COINTED‘s crypto-mining subsidiary. In addition, COINTED AB would have been opened in Sweden and mining would be carried out there, COINTED said.
Until today one can read on the website of COINTED that the mining would be offered by COINTED AB from the 1st quarter of 2018. Well, the first quarter’s long gone. The latest news on the COINTED website is from September 2017. Just recently, we have been informed that large parts of the crypto-mining servers are already offline.
Where are the crypto-debit card and CTD token?
The COINTED white paper also stated that the company would issue its own crypto-debit card. First, it was said that this card would be issued by SWISS CRYPTO GROUP AG, then reference was made to COINTED LTD in Hong Kong. Until today one can read on the COINTED website that the crypto debit card would still come in the 2nd quarter 2018. Soon, then.
Furthermore, there is no information about what happens to the CTD tokens and its holders now the ICO is closed. Up to 650 million CTD were to be sold to investors in the ICO with the target to raise more than 100 million US dollars to finance the further growth. The CTD token should, of course, be traded on a crypto exchange. Actually, just under 6 million CTD tokens were sold in the ÍCO. Nevertheless, COINTED announced in the Bitcointalk Forum on March 12, 2018:
We are proud to say that the ICO ended successfully! We are going to work even more fiercely now that you have given your trust! Please note that any questions regarding Cointed and our tokens are going to be answered on our Telegram channel https://web.telegram.org/#/[email protected]_EN Thank you all!
Up to 650 million CTD were to be sold to investors in the ICO to raise more than 100 million US dollars. The CTD token should, of course, be traded on a crypto exchange. Just under 6 million CTD were actually sold and COINTED celebrated this result as a success. Doesn’t this sound strange? It is!
After this final post, the communication stopped. No further information or guidance was provided to investors since then. In the COINTED´s ICO telegram channel on June 23, 2018, a member called “Philipp” announced that the managing director Wolfgang THALER would soon send a video message regarding the current situation of COINTED. The official COINTED Telegram channel is radio silent.
COINTED’s ATM partner’s accusations of fraud and IP infringements?
Former partner General Bytes has accused COINTED of stealing its technology for the operation of Crypto-ATM’s and infringing licensing rights. Until today you can read the accusations online on the website of General Bytes. Upon request, it was confirmed that the allegations will be upheld. Not only was COINTED‘s Crypto-ATMs used for the OPTIOMENT scam, it is apparently not even clear whether COINTED is even authorized to use this technology.
Closing Down of the Crypto-Business
On June 18, 2018, COINTED informed its customers that due to technical problems and many hacker attacks the operation of its crypto-exchange would have to be stopped at least temporarily (see here Facebook Posting). Officially, this has to be regarded as a complete surprise because just a few weeks ago, on May 2018, COINTED spokesperson Albert SPERL announced in a video interview shared on Facebook that the crypto-exchange would soon offer great new features. Inofficially, this has been expected by the market and people closely to COINTED.
The crypto-exchange was one of COINTED‘s core businesses and now it is closed (temporarily) despite some great announcements. There is nothing to read about this important announcement on the company’s website anyway.
COINTED‘s Facebook posting received some comments from customers complaining that they have not received their money. There are also complaints that COINTED‘s crypto-ATM’s no longer work.
COINTED has spread its cheering messages on all available channels during the ICO. Now, when it’s really important, they don’t say anything. The respective Facebook comments remain unanswered. Apparently, the COINTED people are trying to settle this in silence somehow, away from the public eye. It is currently unclear whether and how much money customers lose through this stop of their exchange business. But we learned that the withdrawal no longer works.
Authority Actions urgently needed for Investors Protection
Given the facts and the obvious issues with COINTED, it’s time for authorities to take actions in the very best interest of investors protection.
In view of the rigorous actions of the competent authorities in other jurisdictions, the Austrian public prosecutor’s office should perhaps also change its caution somewhat and place the protection of investors and the capital market in the foreground. It´s about time for the persons in charge at COINTED to answer questions from the public prosecutor’s office in the interest of investors, customers and market participants:
- What about the alleged misrepresentations in the White Paper?
- What about the false public information about the company’s assets and rights?
- What about the involvement of COINTED and its people in the OPTIOMENT scam?
- What about the Crypto Unity OG and its crypto-mining scheme operated with the support of WACHSENDE WERTE?
- What about crypto-mining investors in Crypto-Unity OG? Who pays them now?
- and many more
In the very best interest of all investors, those questions have to be asked and answered right now, and not at some future point. At the moment the whole team seems to have disappeared.