Is CCG Cloud Mining the latest exit scam?

By Adamq | Protect your crypto | 6 Mar 2020


The latest potential scam I wanted to alert you to is CCG Mining. Whilst I don’t think this started out as a scam, increasingly the behaviour of the firm suggests that the founders are in the middle of executing an exit scam. They have stopped paying out mining contracts and responding to any support enquiries. Whilst I hope I am wrong on this account and would welcome a dialogue with the company, their conduct suggests a large scale fraud.

 

Who are CCG Mining?

CCG Mining is a cloud mining business and was founded in 2016, just in time to benefit from the significant surge in crypto prices from the last bull cycle. They claim to have over 45,000 private clients and 850 business clients and operate across 6 countries in the EU.

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Figure 1. CCG Mining Team

The website looks very professional and prominently highlights the photogenic team. Its interesting to see that all the links from these profiles are broken - the Facebook and Linked-In links just link back to this page. This is an obvious red flag and warning sign. I am not sure if these profiles were always broken but this is how they appear now. The team are all Polish nationals and a quick scan of Linked-In reveals that only Viktoriia has a real profile, where she is listed as the Sales Manager. Oleg the technical guy has a profile, but he is a maintenance contractor (rather than a CCG employee) and Veronika has a profile but doesn’t appear to have anything to do with CCG, she is listed as a photographer. The other team members, most notably the CEO have no profile. This already is very very suspicious.

 

What is my experience with CCG Mining?

As I mentioned, I don’t think that this necessarily started out as a scam, unless the intent was always to first build a user base and then do an ‘exit scam’. I purchased an ETH cloud mining contract with CCG at the height of the last cycle (unfortunately) in Jan 2017.  For the first 18 months, I experienced relatively trouble-free cloud mining. Whilst they were always slow in paying out and answering support queries, there were no issues in eventually getting a response.

This appears to have changed since the middle of last year when they stopped paying out and responding to support requests altogether.

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Fig 2. ETH Payout History

You can see from the above that they have not paid out my last two payments, amounting to ~1.2 ETH. Whilst this is not a ruinous loss to me, its annoying. If they have indeed got 45,000 private customers as they claim and 850 businesses, then assuming a similar level of liability, this amounts to >58,000 ETH worth ~US$13.5M at today's ETH price of $230. You can probably fund a pretty nice lifestyle, going off the grid with this little hoard of crypto.

 

What steps have I taken?

I have made multiple support requests, admittedly getting more and more frustrated over the last 6 months as it became clear what was going on. I have not received responses to any of these and now have 13 open support requests.

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Fig 3. Open support requests

 

You will see from Fig 3 that all my support requests since July last year remain open. My most recent communications with them were to advise of my intent to initiate legal proceedings. Of course….no response.

I reached out to my favourite Crypto influencer, Crypt0 too. He is very well informed on what is going on in the industry and hosts a regular news service on Youtube. I find him to be one of the best sources of unbiased news out there. We had a very interesting exchange:

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Fig 4. Discussion with Crypt0

I thought his comments regarding the CEO were very interesting:

Plus, it looks like the CEO has the same name as an old film maker. This is sometimes used as a tactic, by pseudonymous company creators, in case they do exit scam ..make up a name, or choose someone who lived that was popular (so that no info comes up when searching for the CEO).”

As we saw, the only team member with a legitimate profile was Viktoriia. I tried to connect with her on Linked-In and message her directly but I (predictably) received no response. There are also two Skype links on the website to contact the business. One is to speak with the sales team and the other with the international team. The sales team link goes to Viktoriia and she never responds and the international link goes to someone called Fuchida Yoshio. He has once acknowledged my call and sent me a note to say he would ask support to sort this issue out. That was three months ago, nothing was resolved and he is now completely unresponsive on Skype.

The final step I took was to investigate their UK registered address. It turns out that they have used a business registration service that provides an address in London - i.e a virtual mailbox to look like they can afford a prestigious London address. I called the service provider and asked to speak to the CCG CEO. I knew full well that he wouldn’t be based there and was advised by the consultant who I spoke to that CCG only use this as a mailbox. I asked if they could provide the contact details for the CEO but under GDPR, they are not permitted. The consultant was able to advise that the contract was through a Polish re-seller they partner with. Whilst they couldn’t connect me directly to the CEO through the reseller, they agreed to forward my correspondence. I wrote a letter to the CEO, requesting him to make contact with me so that I can understand why they have broken their contracts and for us to find a resolution to the situation. I am awaiting a response to this enquiry but am not hopeful. (I will not be holding my breath!)

 

What to do next?

My intent in writing this article was two-fold. Firstly, I want to protect any would be customers from using this service as they are still actively selling Cloud Mining contracts and hardware and secondly, I would like to connect with as many of the 450,000 customers (CCG claim) as possible.

If you are a CCG customer and have experienced something similar to what I have described here, then I would love to hear from you. Ideally if we can get 10-20 of us together, I would like to initiate a class action suit against the firm and to sue the CEO personally. Again, if the figures can be believed, then the potential scam size here is significant (>50,000 ETH or ~$13.5M). There should be a nice pool of damages available for us to pursue.

If you come across any of the CCG Mining team members I have highlighted in any other capacity (e.g. maybe you will interview them for a job or you see them as a team member or adviser on some other project), then I would advise extreme caution. Frankly, I would not go near anything that is associated with any of these guys. Whilst they may not be directly guilty of anything, my assumption at this stage is that they are complicit. If this has not been done willingly or their profiles are being displayed fraudulently, then they should ask for them to be taken down.

My final thoughts on this whole episode is that I have little faith in the Cloud Mining industry in general. Whilst they are definitely not all scam artists, there are enough that are, to justify extreme caution. Furthermore, for those that are not scammers, the cards are stacked against the investor to ever make any money. By the time, the costs of maintenance are taken care of, you are relying on very high crypto prices to be able to break even. A far better way to accumulate crypto in the long run is to dollar cost average, buying a small amount every month. In the long run, this is a much easier way to navigate market volatility.

Stay safe out there., the crypto world is full of deplorables that would like to steal your coins!

 

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Adamq
Adamq

Strategy consultant, cryptoenthusiast and amateur author.


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