cairo Egyptians who invested in a cryptocurrency mining app were hit with the hard realization last week that the incredible profits they thought they were making boil down to fantasy. The platform, named Hogpool, was launched in August.
In a promotional video, a man introduces the company with the claim that it was founded in Colorado
2019 and was investing in cutting edge industries, from “life science technology” to “space technology and blockchain”. He called it “one of the leading energy providers worldwide” and said it offers “cryptocurrency mining at all levels.”
Potential investors were offered various schemes starting at just $10, promising fixed profits of $1 per day over a specific period. Investment options ranged up to an $800 crypto-mining “machine” with payouts of $55 per day.
Hogpool told investors that they could withdraw their money daily, minus the 15% tax, or wait until the end of the month and collect all their returns tax-free.
For Tarek Abd al-Barr, who works in medical supplies, it seemed like an incredible opportunity.
“They said they were ‘workers in the mines,'” he told CBS News. “No one in Egypt knows what mining coins are. We don’t know anything about these things. We thought it was electronic investment – that they were like Amazon or Microsoft.”
Pyramid and Ponzi schemes are nothing new in Egypt, but cryptocurrency scams are. The receptions, parties and meetings held by the people behind the hogpool in fancy hotels and other venues gave users the impression that it was all on the upswing.
Lawyers and victims told CBS News that the ads on the social media platform attracted some people, but were familiar to many who were already addicted to them.
Abd al-Barr’s brother-in-law, who was using the app and seeing steady profits, convinced him to join. Skeptical at first, he started in February with an investment of just 6,000 Egyptian pounds (about $200). It seemed to work as promised, as scams like this often do, and he got his money back with a profit, so he tripled his investment.
The platform’s biggest and final offering was a new “Deposit Fund” feature, with which users were told they could earn up to five times the value of their existing investments in just five days. Abd al-Barr was again skeptical, but as it had worked so far, he went ahead and took the risk, throwing all his savings into the app.
When he tried to withdraw the money on February 27, it did not work. Two days later, on March 1, the app stopped working completely and the website disappeared.
“Many people took loans from banks to invest in it. I used my car installment money. Now I have paid two installments and the bank is calling me,” he said.
Dozens of videos of people sharing their stories and cries for help quickly flooded the internet.
Egyptian authorities on Saturday announced the arrest of 29 suspects, including 13 foreign nationals, in connection with the scandal. Police seized 95 phones, 3,367 SIM cards and Egyptian and foreign currency worth about $194,000, the interior ministry said in a statement. It said the criminals used 88 digital currency wallets to collect the money, then divided it into 9,965 e-wallets and converted it into bitcoin before transferring it to accounts around the world.
The statement said the suspects had billed unsuspecting investors at least 19 million pounds, or about $615,000, but many in Egypt believed the actual total was likely much higher.
Lawyer Abdulaziz Hussein told CBS News he was representing more than 1,000 victims of the scam in Cairo alone, but as many as 800,000 people across the country may have been victims of the scheme, totaling £6 billion 194 million dollars.
Cryptocurrency trading is illegal in Egypt, and another lawyer representing some of the victims said many were deterred from reporting the crime.
Mahmoud al-Semri said, “Some victims may turn into suspects if the investigation proves they knew what they were doing was illegal.”
It is difficult to tell how many of the victims may have continued to invest, and recruit others, with the knowledge that cryptocurrencies were banned in the scheme, especially as it appears that most joined through recommendations from friends or family – people they trusted and who, in many cases, probably meant well.
“Most people didn’t look into how it worked, we just understood they would make money programming,” Hussein El-Fahm, a lawyer who himself was caught up in the scandal, told CBS News. .
He said it was an elaborate scam that looked legitimate and legitimate with forged documents.
El-Fahm said he and others heard warnings about it being a scam, but as the app continued to pay money as initially promised, those reports were easy to dismiss. The people behind the app also used the fraud alerts as a marketing tool, he said.
El-Fahm shared a screenshot with CBS News that shows scammers warning users of “fake” apps, asking them – in poorly written Arabic – “Please be careful, those scammers have less There’s a level of technology, and they’re stupid enough.” Copy our system layout. Keep your eyes open.”
Al-Fahm lost about $6,000 in the scheme.
Physiotherapist Dr. Sarah Zain told CBS News that she was skeptical about the app even though she had used it because it appeared to be an unsustainable business model, but thought it would take longer to fall apart. He didn’t withdraw his money in time and lost more than $7,000, which he said he needed for an upcoming surgery.
“A friend of mine and her family invested two million pounds (about $65,000), she’s not talking to anyone now,” she said. “I can’t believe we were so stupid! They brainwashed us.”
Zain also placed some of the blame on the government for allowing the scammers to operate openly for months.
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