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The United States Securities and Exchange Commission works to educate potential crypto investors on the pitfalls of investment scams, calling out certain “red flags” investors can look out for that may indicate the investment opportunity could be a scam. Among the most glaring of the red flags cited, are the promise of guaranteed returns.
A new report out of Hong Kong is proving to be the perfect example of why investors should avoid any promise of guaranteed returns, even if the person behind the investment is a self-made Bitcoin millionaire who makes money fall from the sky.
Bitcoin Millionaire Accused of Defrauding Hong Kong Investors
Hong Kong-based cryptocurrency business man Wong Ching-kit is in hot water currently, as investors in the region are claiming the millionaire defrauded them out of HK$3 million as part of a cryptocurrency mining investment scam.
Four investors are demanding a full refund from Wong, each offering losses ranging from HK$20,000 to HK$1 million, however, police say that ten others have claimed Wong scammed them out of an additional HK$940,000 through the same phony cryptocurrency business.
Related Reading | Hong Kong Bitcoin Wiz Throws Millions From Rooftops
The burned investors claim that Wong sold them crypto mining hardware specifically designed to mine the Filecoin cryptocurrency Wong promotes. Investors who purchased the cryptocurrency miner from Wong and his business were promised to make a profitable return on their investment within three months.
Investors felt safe given the assurance that their initial investment would pay off so quickly, and were even promised a full refund – a refund that has since not been honored. An investor who provided the name Ms. Chiu explained that when attempting to receive a refund, Wong used “delaying tactics and made different excuses to turn us down.”
Wong took to Facebook, but fell short of denying the accusations investors are making, instead suggesting the investors are just upset because they lost money. “When they make money, there is no thank you. When they lose money, they call it a scam” he said.
Beware of Red Flags in Crypto and Bitcoin Related Investments
As for why investors may have been duped into believing Wong and his claims, the 24-year-old did indeed became a millionaire by investing in Bitcoin. Wong, who also goes by the nicknames “Mr. Coin” and “Coin Young Master” also pulled some infamous publicity stunts to improve his reputation, including making money fall from the sky by tossing at least $6,000 in fiat currency from a Hong Kong high-rise.
Related Reading | SEC Educates Investors On Red Flags By Launching Fake Crypto Site
This case of fraud allegations serves as a perfect example of why crypto investors need to beware of any investments that present red flags such as guaranteed returns. Other red flags include celebrity endorsements, the ability to invest with a credit card, and more.
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