Dozens of people in the UK are turning to the police after investing in a fraudulent cryptocurrency app. In the Northeastern part of the country alone, 78 victims have lost over £214,869 (over $272,000).
Coscoin (also known as Cos or Cosetek) said it can “double investments quickly.” However, victims across the UK say they’ve been unable to access or withdraw funds from the platform since November 2023, with an average loss of £2,900 per victim, the North East Regional Organised Crime Unit (NEROCU) said in a press release shared with VPNOverview.
Coscoin claims it’s an “AI quantitative trading platform” based in Washington. The app “appears to also incentivise users to recruit further people to the platform in what appears to be a Ponzi/Pyramid scheme,” NEROCU added. Users are invited to join WhatsApp groups, where messages from Coscoin are shared. These WhatsApp groups reportedly have thousands of members.
In a recent podcast, BBC News’s Andy Watson, who investigated Coscoin, revealed that the platform “had paid out to some people.” However, “on the 23rd of November [2023], users were unable to withdraw their funds after being promised a Thanksgiving special.”
At the time of writing, a website with the same logo called COSCOINS is still online, though the others that were reported (https://cosetek.com, and https://coshman.com) are offline.
App Offered to Double Investments With the Press of a Button
To invest in Coscoin, users were directed to transfer funds via the legitimate third-party cryptocurrency exchange, Kraken, BBC News said. Once the funds are deposited, the app notifies users when to press a button — a step the platform claimed was “quantifying their investment” and potentially increasing it.
“I thought it was legit because I could withdraw my money and it did increase my initial investment,” Nik Pearce from Hartlepool told the BBC. Afterward, he told his family and friends to sign up, which resulted in them, including Pearce, losing £3,000.
On Dec. 15, 2023, the Washington State Department of Financial Institutions (DFI) linked the self-proclaimed “world-leading AI quantitative trading platform” to other suspicious platforms such as ITP, DCPTG, and Alevius, warning investors about unverified cryptocurrency trading platforms. The DFI first put out a warning in Sept. 2023 that Coscoin “may be engaged in fraud.”
“DFI has reason to believe that ITP is connected with Coscoin, DCPTG, and Alevius, all of which are purported investment trading platforms registered with the Washington State Secretary of State,” the DFI said. It added that Coscoin, DCPTG, and Alevius likely don’t operate from their listed Washington State locations, and may be conducting unlawful business activities.
The DFI told VPNOverview that ITP and Coscoin used fake addresses when registering their companies with the state. “Investors should not presume a platform is legitimate based on filings made with any state’s Secretary of State or Corporations Division as filings may include inaccurate or fraudulent information,” the DFI said.
The Case of the Former Nissan Employee
“There’s been multiple stories of people investing savings, in some cases bank loans, into the app and they’re unable to get it back. It really has been a massive issue in the Northeast,” Watson said on the BBC Radio Newcastle podcast.
Mark, one of the victims Watson spoke to, was a Nissan employee who was approached and encouraged to join the platform in June 2023. Mark said he registered under a new email, following instructions to deposit and get started.
Like other Coscoin investors, Mark was directed to join WhatsApp groups, where he was introduced to “Sophia,” purportedly a project manager of Coscoin. Sophia, who used an international number, enlisted Mark as a group admin. His role involved providing scripted responses to investor queries and removing any messages labeling the platform as a scam.
As Mark continued his role, he was promised a full-time position with a substantial salary, prompting him to leave his job at Nissan. However, doubts surfaced when users started facing issues withdrawing funds. His attempts to address these concerns were met with vague responses from Sophia, further fuelling suspicions of a scam.
Eventually, all communication from the platform to its users ceased, leaving Mark and other users unable to withdraw their investments and facing significant financial losses. This experience turned into a nightmare for Mark, as he not only lost his stable job but is facing hostility and “death threats” from aggrieved investors.
Meanwhile, Dmitry Kondratyev, malware analyst lead at Kaspersky, told VPNOverview that Coscoin has many of the “traditional characteristics of Ponzi or pyramid schemes.”
“Organizers promote a new and lucrative method to earn money, enticing investments from numerous unsuspecting users by promising significant returns. However, the pyramid eventually collapses, resulting in no returns, and the organizers abscond with the invested money,” Kondratyev explained.
How to Avoid Investment Scams
According to NEROCU, there have been reports of other platforms like Coscoins. Detective Inspector Paddy O’Keefe warned the public to be cautious of shady investment opportunities. “There are those out there looking to exploit others and steal their hard-earned money to increase their illicit gains,” he said.
“Criminals will also create scams promising to recover investments so please avoid any instances where you could be victim to further frauds linked to your original loss,” he added.
It’s important to be skeptical of investment apps you encounter on social media or via relatives and acquaintances, especially those that seem too good to be true. Stick to time-tested and trusted investment apps.
If you’re wondering if an investment platform is legit, the DFI recommends checking its consumer alerts page to see if it has been mentioned there. Also, check for inconsistencies or errors on the app or website. “Investors should also be wary of advertised unrealistic, nonsensical, or time-sensitive investment returns,” the DFI said.
Kondratyev echoed the same sentiments. He recommended being suspicious of unknown companies claiming to have a “long market presence” and offering “unrealistically high” returns.
Coscoin Red Flags
BehindMLM, a website that investigates and exposes multi-level marketing scams, outlined some red flags with Coscoins:
- Lack of transparency: They don’t provide clear information about their owners or executive team.
- Suspicious coding: The use of Meiqia software, sourced from Baidu, suggests ties to China and raises questions about the platform’s origins and operations.
- No real products or services: They don’t offer any products or services and focus solely on affiliate membership.
- Ponzi scheme characteristics: The compensation plan is based on a multi-level investment scheme reliant on recruitment, which is typical of Ponzi schemes.
- Misleading “click a button” ruse: They claim clicking a button in the app would trigger quantitative trading and generate revenue. However, this was just a facade; clicking the button has no real financial impact.
- Recycling investments: The platform uses new investments to pay earlier investors, a hallmark of a Ponzi scheme.
- Part of a wider scam trend: It is one of many similar “click a button” app Ponzi schemes that have emerged, most of which collapse quickly, leaving investors with losses.
Read our guide to common cryptocurrency scams for tips on how to spot fraudulent crypto investment schemes.
If you have been impacted by this or any other crypto scam in the UK, we recommend you file a report with Action Fraud. If you live in the U.S., contact your state’s securities regulator.
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