I Listened to a Pitch for a Possible Bitcoin Scam So You Don’t Have To
If you get a similar phone call, stop and think about whether what's being offered is actually realistic. If it sounds too good to be true, it's probably a scam.
What would you think, upon answering a phone call, if you heard, “How would you like to make 21% on your money, guaranteed?”
You would probably wonder, “Hmm, sounds interesting, so what’s the catch?” Or, you might think, “Wow! Sure! How do I get in?” That’s what scam operators are banking on — you falling for a way to get a return on your money that no one else is offering.
As a legal affairs columnist, I had to listen to the pitch instead of hanging up, because no doubt lots of people were hearing the same song. So I replied, “Tell me what you’re offering and why it’s not a Ponzi scheme.”
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Let’s take a moment to remember Bernie Madoff
This potential scam resembles a Ponzi scheme in that the “guaranteed” high returns are unrealistic. The largest Ponzi scheme in U.S. history was run by Bernie Madoff, who took investors’ money, promising steady returns. Instead, he defrauded thousands of people out of an estimated $65 billion over about 17 years, paying early victims with money from later victims until it all came crashing down in 2008. Many lost their entire life savings. There were suicides. Madoff died in prison in 2021.
Iggy delivers his pitch
“Mr. Beaver, I’m sure you are well acquainted with the digital currency bitcoin,” “Iggy” began, launching into his pitch. “I work for a digital asset creation organization based in Austin, Texas, where we mine bitcoins with powerful computers. We arrange for you to buy computers that we lease from you and use them to mine cryptocurrency, paying a fixed and consistent monthly cash flow. After five years, we buy back the computers for what you paid. We make our money by selling the bitcoins that your computers generate.”
As he was talking, I was thinking, Hang on, the price of bitcoin has never been stable, so how can they guarantee a 21% steady return? And why do they need me to buy their computers? Why don’t they just use them themselves, for free, to mine bitcoins?
Beautiful advertising material: The pressure begins
I asked for, and Iggy agreed to email me, documentation on his company, which arrived in seconds. The materials are as smooth as a newborn’s behind, describing company philosophy and how the purchase-leaseback works and showing photos of the contracts customers sign (though the contracts shown are not readable).
It was clear to Iggy that I just didn’t understand this new world of digital currency. The following day, one of his managers phoned. Over about half an hour, I listened to a polished explanation of why something I could not touch was the next greatest thing. “Look at the online reviews. They are all excellent,” he boasted.
Most were, but great reviews can be purchased, as I discussed in my article Can You Trust Online Reviews? Apparently Not Much.
“Well, it is obvious that you are old-school, Mr. Beaver,” Iggy’s manager said. “I’ll bet that years ago if someone told you about an investment in cellular networks or Wi-Fi, you would have had the same skeptical attitude,” he said in a condescending tone of voice.
I replied, “Not at all. My concern here is about how unrealistic your guaranteed return is for a currency that is notoriously volatile. But I do appreciate your call.”
Request from a reader and former client
I thought that was the end of it, but the next day, a reader and a former client called our office to ask if I knew anything about this same company. They both had received similar sales calls and asked if I would review the company’s contracts for them. The reader is a fairly well-off retired pharmacist, but my former client sustained a brain injury in an accident and receives monthly checks from an insurance settlement. He wondered if it would be a good idea to cash in part of the annuity and invest.
So I called Iggy and requested a specimen of their contract to review. And that led to an interaction worthy of a Saturday Night Live skit.
The same manager phoned and explained that everything is “Docusigned” online, so there is no sample contract available.
“Oh, so you can’t just run off a blank one?” I asked.
“No, we only process a contract after you become a client of ours and are ready to invest.” But the kicker was something that I had never thought of: “And besides, we will not have any computers to sell until November.”
“Really? What does that have to do with sending me a sample contract?”
He did not answer.
So, is this a scam, or is it legit? I do not know. But anytime someone wants me to invest, lease a building or establish an ongoing financial relationship, I want to see their contract and have it reviewed by my financial adviser and CPA. If that request is refused, then my answer is no!
Here are some things you can do to avoid falling for a scam:
- Always ask questions
- Don’t feel pressured
- Consider whether what you’re being offered is logical/realistic
- Request a sample copy of the contract to show to your financial adviser or lawyer and follow their advice on whether it’s a good deal or not.
Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.
Related Content
- How to Spot a Social Security Scam (and What to Do About It)
- I’ve Been Scammed Twice: Here’s How You Can Avoid That
- Seven Ways to Protect Older Adults from Financial Abuse
- How to Avoid Getting Ripped Off by an Alarm Company
- Can Language Apps Teach You to Speak a Foreign Language?
-
65 or Older? Cut Your Tax Bill Before the Clock Runs OutThanks to the OBBBA, you may be able to trim your tax bill by as much as $14,000. But you'll need to act soon, as not all of the provisions are permanent.
-
Selling Your Business? Start Planning Two Years in AdvanceWay before selling your business, you can align tax strategy, estate planning, family priorities and investment decisions to create flexibility.
-
We inherited $250K: should we buy a second home or save for college?He wants a vacation home, but she wants a 529 plan for the kids. Who's right? The experts weigh in.
-
65 or Older? Cut Your Tax Bill Before the Clock Runs Out
Thanks to the OBBBA, you may be able to trim your tax bill by as much as $14,000. But you'll need to act soon, as not all of the provisions are permanent.
-
The Key to a Successful Transition When Selling Your Business: Start the Process Sooner Than You Think You Need To
Way before selling your business, you can align tax strategy, estate planning, family priorities and investment decisions to create flexibility.
-
I'm a Financial Adviser: This Is the $300,000 Social Security Decision Many People Get WrongDeciding when to claim Social Security is a complex, high-stakes decision that shouldn't be based on fear or simple break-even math.
-
4 Ways Washington Could Put Your Retirement at Risk (and How to Prepare)Legislative changes, such as shifting tax brackets or altering retirement account rules, could affect your nest egg, so it'd be prudent to prepare. Here's how.
-
2026's Tax Trifecta: The Rural OZ Bonus and Your Month-by-Month Execution CalendarReal estate investors can triple their tax step-up with rural opportunity zones this year. This month-by-month action plan will ensure you meet the deadline.
-
Is Your Retirement Plan Built for 2026 — or Stuck in 2006?It's time to move away from the 4% rule and the 60/40 portfolio to an adaptable, tax-diversified strategy focused on reliable income and longevity.
-
Filed for Social Security Too Soon? 2 Ways to Get a Do-OverIf you've claimed Social Security too soon, two SSA rules allow a do-over. But be warned: Using them clumsily can lead to surprise repayments or lost benefits.
-
Have You Aligned Your Tax Strategy With These 5 OBBBA Changes?Individuals and businesses should work closely with their financial advisers to refine tax strategies this season in light of these five OBBBA changes.
