The state Attorney General's office yesterday sued a Chinese cryptocoin venture with a name almost identical to another, more legitimate cryptocoin venture for defrauding cryptoinvestors - and moved to freeze the company's assets, which the state says it traced to an account with yet another cryptocurrency company.
In a lawsuit filed in Suffolk Superior Court, the state says at least two Massachusetts residents wound up bilked by the fake company, which snared them with promises of healthy returns on an impending "initial coin offering" that never happened, at a domain called creditcoin.cc, which uses links to documents at creditcoin.org, which is a real company not affiliated with the Chinese knockoff.
Since at least March, 2023, CreditCoin has been representing itself as a "public blockchain," offering a "utility token," also called CreditCoin or CTC, through an upcoming "initial coin offering. In reality, CTC is a fictional cryptocurrence and all representations made about an upcoming ICO are untrue.
The state described how one person was swindled, starting with him getting chatted up on TikTok:
A CreditCoin representative approached one Massachusetts consumer through TikTok and initiated a personal relationship with him. During his communications with CreditCoin's representative, this Massachusetts victim disclosed that he resides in Massachusetts.
The CreditCoin swindle rep, who went by "Akiko Herrera," then got the impending victim to switch to the Telegram platform, which is more focused on conversations and where:
CreditCoin representatives use manipulative techniques to install a sense of security in the victims, such as engaging in personal conversations and discussing plans to visit the victims. Once trust is established, the CreditCoin representatives introduce the idea of cryptocurrency investments, such as investing in CTC ICO.
In order to establish a guise of legitimacy, CreditCoin creates hurdles to investing, such as requiring victims to notify CreditCoin of the exact amount of Bitcoin that was being sent to the wallet. If there is even a minor discrepancy, the transaction will fail. these challenges helped convince victims that CreditCoin was not a scam.
Once the original investment is made, the CreditCoin website reflects the victims' balance growing. CreditCoin representatives communicate with victims about their own earnings. The representatives indicate they are going to continue to invest and encourage victims to do the same.
On March 24, one Massachusetts victim went to Cash App and bought roughly $1,350 worth of Bitcoin, which he then transferred to CreditCoin as his initial investment, the complaint says.
He then watched as his investment "grew," at least according to the CreditCoin Web site, was encouraged to keep investing and, over the next two months, converted some $13,500 in real money into Bitcoin, which he then transferred to CreditCoin.
By May 16, CreditCoin was showing him with a balance of $54,270, the complaint says.
Then, the complaint continues, he got notification that the planned "initial coin offering" was going to happen soon and that he should liquidate his holdings because the value of the cryptocurrency would drop soon after its release. Only thing is, liquidating his holdings would require a "security" fee plus taxes, equal to $4,794.
And in text messages he supplied to the AG's office, it began to dawn on him something was wrong, because he was never told about withdrawal fees - and he knew that capital-gains taxes are paid on the profits after the fact, not beforehand. CreditCoin told him he was wrong, he could go Google it and that his funds would be available for withdrawal in real money at a particular exchange site in 24 hours.
Reader, would it surprise you to learn those funds were not available in 24 hours?
Using blockchain analytics tools, the Commonwealth traced the victims' funds, via several transactions, to a single wallet hosted by Binance.com. ...
This wallet is under the name Wang Tingting, who is a resident of China.
This wallet currently has a balance of $281,352 USD.
In addition to seeking to block CreditCoin.cc from making any offerings to Massachusetts residents, the state is also seeking an injunction to freeze Tingting's assets at Binance.com. Late yesterday, a Suffolk Superior Court judge set a hearing for Thursday on the request.
Reddit was onto the scam five months ago.