Bitcoin Gold scam worth of $3.3 million in Illegal activities

Bitcoin users seeking to own shares in the new Bitcoin Gold lost a total of $3.3 million through scam after submitting their private keys or recovery seeds to operators of the scam website.

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The operators of the website asked for the private keys or recovery seeds claiming they will use them to generate bitcoin gold wallets but then sent the money to different addresses.

It seems people with little or no know-how in cryptocurrency dealings and tech are still falling prey to more scammers.

Also Read: Insight About the Blockchain’s Next Split: Bitcoin Gold

Some victims blame the association of the scam operators with the official Bitcoin Gold project with one complaining to CoinDesk that the scammers posted the scam website link to the official Bitcoin Gold project. The official Bitcoin Gold twitter account also claimed or indicated, several times, that the project was safe to deal in.

“I reached this site by following the link at [the] official website so I trusted it. Yesterday afternoon I noticed both my BTC and BTG storing in that wallet were gone.”

Bitcoin Gold spokesperson Edward Iskra said the twitter posts promoted the project because of John Dass, who is reportedly the owner of the project according to Iskra, was part of the Bitcoin Gold community. Dass was even in BTG Slack channel though not named as part of the project formal team. He developed the anyway.

He had no formal relationship with BTG, says Iskra.

“The BTG Twitter account was simply supporting an individual in the community who was supporting BTG. Since that was their sole intent, at the time.”

Code analysis of the scam website’s code shows it stored the recovery keys. They also changed its GitHub code.

Read Next: Bittrex concerns official statement about Bitcoin gold, warns end users

“So, to summarize, every time someone enters their mnemonic seed into, their mnemonic was Base64 encoded. It stored on the website cookie and then transmitted to Google. In which the scammer was free to decode it and have full access to that person’s private keys derived from that seed”. Future Uejji writes who did the analysis. “And that’s how somebody scammed the Bitcoin community out of over $1 million USD. Therefore, scammed the Bitcoin Gold team into recommending his website to do so.”

Meanwhile, Bitcoin Gold say they will figure out a remedy to the situation. Bitcoin Gold developers issued a statement on the matter, which reads in part:

“The team is working with security experts to get to the bottom of this issue. It appears the mybtgwallet online wallet site modification done by unknown parties long after it was originally declare. We are closely following the ongoing investigation and expect all findings to be discloses to the public as soon as it is appropriate to do so.”

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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