Have I been conned? My dealings with a cryptocurrency trader


In January last year I decided I wanted to jump into the world of investments. Over the years I thought I had been doing a reasonably good job with managing my personal finances. I approach my personal finances by looking at: Short Term, Medium Term and Long Term plans.

For my Short Term goals: I try to aim to have around 3 months net pay saved. This means if any unexpected costs come up eg. the boiler breaks down, I know I can pay for it without using credit card debt or overdraft debt. No need to stress if the household needs something last minute. I keep the bulk of this in a cash ISA so that any interest I earn is tax free. See below:

My short term savings are kept in a cash ISA

For my Medium Term financial goals: I aim to invest in a stocks and shares ISA. For any stocks and shares ISA’s or funds I have invested in, I always aim to stay invested for a minimum of 5 years. This helps to ride out any volatility and means I don’t tend to worry about trying to ‘time the market’. There will always be volatility with equities, the important benefit is that over time stocks and shares tend to outperform cash. Thats why I’m not worried about the recent dip in the markets caused by fear of the economic impact of coronavirus. Take a look at my stocks and shares ISA below:

My stocks and shares ISA

For my Long Term financial goals: I only have my work place pensions. I currently contribute 3% of my monthly salary whilst my employer contributes 6%. Increasing my pension contributions could be a great way to increase my wealth, as my employers contributions increase in line with mine. I still however find it difficult to wrap my head round this as it’s such a long term plan and it will take decades for me to benefit from it. Ideally in the long term I’d like to grow my long term portfolio to include property. Perhaps I’ll save sharing these ideas for another post. Take a look below to see one of my pension accounts:

One of my pensions

My introduction to the world of cryptocurrency

As you can all see from the above, I have taken a fairly sensible approach to personal finance and investments. The problem was, I believed that I could be achieving much more. The most my medium term stocks and shares ISA was likely to achieve was +6% growth per annum and the interest rate on my cash ISA was measly 0.6%. I wanted to make bigger investing moves to grow my personal wealth at a faster rate. When you read stories about people like Warren Buffet, the mistake a lot of people make is assuming that it’s easy to achieve success. Having had a ‘Wolf of Wall Street’ style impression of the excess and wealth that can be achieved by people involved in the finance world I was optimistic about getting involved in any form of trading. Some friends and family of mine let me know about some ridiculously huge returns they were making on a cryptocurrency investment. I was then introduced to the sketchy world of cryptocurrency. The unregulated wild wild west of the investing world. With all of the common sense I thought I had, I was still tempted by the lure of high profits. I had a false sense of security as close family and friends were already invested and having a positive experience. Take a look below at the returns being promised by the ‘company’ I’m invested with.

Investment packages offerred by the cryptocurrency trader I invested with

What returns did they promise…?

These Return on Investment (ROI) figures are unreal. A 7% daily return on a $6000 investment would return on average $420 per day totalling $8400 in a month. That would represent a 140% return on 1 month. To be fair it was made clear to me that I wouldnt hit the daily ROI advertised on their website. I did however hit around 50% returns on a couple of months. How do they claim to making these returns? By trading the value of the US dollar versus Bitcoin or another cryptocurrency depending on what you discuss with your trader and what type of account you decide to go for. The red flag should have been that these returns are unrealistic. The best investment funds in the world are unable to achieve any where near the returns promised by this small group of cryptocurrency traders.

How did I make my cryptocurrency investments?

Their investment platform involves setting up an account via their website where you can track your investment amount and watch it grow. Now for the dodgy part. To make an investment you have to send money via cryptocurrency to your traders cryptocurrency wallet. Every month they pay out your total monthly profit keeping the original investment amount with them until you have met the minimum investment terms (see above image). The only way you can receive a payout is to send your trader your cryptocurrency wallet address then they will send you a payout via cryptocurrency. This is completely unregulated, and if the trader decides not to send you any money, I don’t think there is much you can do about it!

Initially I tested the waters for a month with a £1,000 investment. I made £183 within a month and I was sold. That was a 18.3% return. After that I jumped in both feet first and increased my investment by £4,200, this was an initial investment amount that needed to be held for a minimum of 8 months. Initially I received healthy monthly payments of £3,538 and £2,095. 68% and 40% monthly returns respectively. Deep down I questioned how these sky high returns could be sustainable, I questioned how it was possible for someone to deliver these returns for clients from day trading cryptocurrency versus the US dollar. Ultimately I ignored those thoughts as I was blinded by the sky high returns. Although I received payments monthly, those payments steadily declined. The returns reduced from £3,538 to £784. The problem was that despite the declines £784 still represented a 13% monthly return. In comparison to the 6% annual return I was looking at with my stocks and shares ISA, I still believed I was onto a winner.

A snapshot showing some of the payments I received from my cryprocurrency investment

With the crypotocurrency investment being the only investment that was returning money I took the decision to reinvest £3300 of the profits into a US dollar vs Etheruem (another type of cryptocurrency) investment with the same trader.

The returns continued to decrease. The monthly payments became 6 weekly payments and sometimes 7 weekly. As I had had my US dollar vs Bitcoin account for 8 months I decided it was time to withdraw the full amount. At this point I had approx £6000 dollars in the account.

My Bitcoin account with the cryptocurrency trader at the time of writing

When I requested a full withdrawal I was told that it wasn’t possible. I was told that I would need to wait a minimum of 8 months with no monthly payments to receive the money. I was told that the money was tied up in other cryptocurrency investments and Initial Coin Offerings (ICOs). I hit the roof. Finally it was confirmed that there was no transparency with what was happening with my investment, and it wasn’t being invested in what we had initially agreed. After a series of conversations the trader agreed to a payment plan which he has not yet kept to (for one of the accounts). He admitted that he didn’t have the money to pay me back but has promised to do so within 5 months rather than 8 months.

So, have I been scammed?

In total I invested £8,510.09. I have received a total of £8,911.93 in monthly payouts. This puts me at £401.84 profit which would be a 4.7% return which I don’t think is too bad. What’s frustrating is knowing that if I hadn’t reinvested some of the profits, even if I don’t get back my original investment amount I would have been in profit £3702.63 representing a healthy 43.5% return.

There is still a total of $10,857 (the original investment amounts + a small amount amount of profit) sitting in my two cryptocurrency accounts I have with the trading company. They are in contact with me and claim that they will pay the full amount back. Most scam stories involve the scammer ‘ghosting’ the victim. I haven’t been ghosted. I have received payouts for the best part of a year. I have been payed out more money than I have put in. Maybe I haven’t been scammed. But this doesn’t stop me feeling that their practices are dodgy and the investment is high risk. I still can’t explain why the returns were so high. Is this a glorified ponzi scheme? I dont think I will ever truly know.

What are your thoughts? Comment if you think you are able to shed some light on this…