The latest reports on September 16 reveal that the Philippines SEC has identified ‘Mining City’ as a Ponzi scheme. The Commission has gone ahead to warn promoters of the scam that they might be charged and sentenced to up to 21 years imprisonment. The SEC released an official warning about Bitcoin (BTC) “cloud mining” company Mining City.
Such incidents are rising in the crypto world as investors rush into the budding market for fear of missing out (FOMO). But, the Philippines SEC has advised the public to stay away from the scheme and others like it. Despite these warnings, the price of related crypto is on the rise. The official warning describes the firm as an unlicensed entity in the country.
This company was also not functioning “following guidelines for virtual currency exchanges.” The warning reads:
“The aforementioned scheme used by Mining City clearly shows an indication of a possible Ponzi scheme in which new investor money is used to pay ‘bogus profits’ to those who invested first.”
The same notice also pointed to Mining City’s team leader Anthony Aguilar, CEO Gregory Rogowski, and Facebook page admin Jhon Rey Grey as the masterminds involved in the scheme. All of these individuals will be reported to the Bureau of Internal Revenue for investigation about their tax assessments.
How Mining City Scam Works
This scheme is advertised to offer cloud mining packages in the form of three-year contracts. In this case, hash power is rented to different investors worth between $300 up to $12,600. It also claims to give returns of up to $92 per day.
Mining City operates in partnership with MineBest which is the creator of the Bitcoin Vault (BTCV) scam. Investors got their profits in the form of BTCV tokens. The regulator told the public:
“Not to invest or stop investing in plans offered by Mining City or by entities that engage in smart contracts; cryptocurrencies or digital asset exchanges that are not registered with the commission.”
The Philippines SEC said that the promoters can be criminally prosecuted with fines of more than $100,000 or imprisonment of up to 21 years. In the two weeks before this warning, the BTCV price lost a staggering 76% from $425 on August 23, to $100 on September 10.
Since then, the price has regained some ground trading above $160. It means that the warning may not have been effective in deterring public interest in the alleged scam. Turning to Mining City’s website, it is clear that the program will continue to run even if the site is shut down for any reason. Thus, it is most likely immune to government interventions as a result of its decentralized nature.
Previously, the Philippines SEC had also flagged notorious Ethereum gas guzzler “Forsage” as a Ponzi scheme in July. But, it was stronger than ever in August boasting an expanded userbase of around 390,000 users; and a daily turnover of more than $3 million. Forsage today has at least 1,900 daily active users on Ethereum (ETH) and 800 active users on Tron (TRX), according to DappStats.
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