Banking/FinanceNews

Singapore-based KaratBank creates a cryptocurrency bound to physical gold

KaratBank crypto is reportedly pegged on the value of the gold from CashGold, but suspicions of scam are surfacing. For instance, the company was ban in Canada in 2014. It is currently holding a pre-ICO.

KaratBank has launched KaratBank Coins (KBC), crypto pegged on gold. The company is a sister company of Germany-based KaratBars International that sells gold in small amounts such as 0.1g to 1g billions. It is embedding in plastic cards (Karatbars) or cash-like notes (CashGold).

10,000 KBC can be exchanged for 0.1g CashGold notes according to KaratBank whitepaper.

Additionally, the company currently has a pre-ICO for the cryptocurrency, which will continue until March 21. The main ICO will then begin on March 22 with KBC trading for $0.05. It is not clear whether this is a scam. Banned in Canada in 2014 over an Autorité des marchés financiers (AMF) Scam warning, the company dealings are at the center of many scam claims.

The Canadian government found that KaratBars used multi-level marketing (MLM) and was promising people a  profit of $15,000 to $136,000 per month.

The white paper says that United States of America citizens, residents (tax or otherwise) or green card holders, as well as residents of Canada, the People’s Republic of China or the Republic of Singapore, are not to participate in the ICO. This might be because some of these countries have strict regulations governing ICOs.

Behind MLM website says that although Singapore hasn’t banned ICOs, shutting down KaratBars’ shell companies, KaratPay and KaratBars Singapore would negatively affect the company. Therefore the company may be wanting to avoid any of these risks altogether. They say the company would need to register with regulators under such cases. This might become more suspicious, which risks it want to avoid altogether.

The website also raises more red flags such as the fact that the ICO comes with annual membership fees. The “investment packages” have a time “free membership” period, after which an annual membership fee will be withdrawn. This is suspicious since most legitimate ICOs do not have yearly membership fees. According to the website, although the proceeds from the ICO will be using to buy CashGold, the coin is not pegged to the purchased CashGold.

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David

David Kariuki is a journalist who has a wide range of experience reporting about modern technology solutions including cryptocurrencies. A graduate of Kenya's Moi University, he also writes for Hypergrid Business, Cryptomorrow, and Cleanleap, and has previously worked for Resources Quarterly and Construction Review magazines.

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