Ponzi schemes are investment schemes in which existing investors are paid alleged returns from funds contributed by new investors. And lately, these schemes have been using cryptocurrencies, mainly stablecoins, as their so-called "reward tokens" which could then be converted into fiat. The Philippines has been a target country of the Ponzis and one of the latest that shocked the nation was an app called Hero Mining.
What is Hero Mining?
According to their app's description, Hero Mining is an app that offers crypto mining through renting of virtual A.I. powered miners, referral system, task completion and also through their in-app staking called HMC Wallet. This app claimed:
The app garnered 100k downloads across the nation as it featured what you can call bogus security features such as:
🔴 Safe & Secure: Professional financial security level, Heavy money and multiple security protection.
🔴 Fast Flow: Fast flow of funds, Serve attentively every day, Multiple technical safety protection.
🔴 Three-Level Rebate: Easily realize automatic revenue, Multiple levels make making money easier.
🔴 Short Cycle: Committed to providing global users with low-threshold short-cycle digital currency mining services.
🔴 Higher Efficiency: Run more than 800,000 mining machines and the mining efficiency 30%-50% higher than peers.
🔴 100% Transparency: All transactions will be verifiable on the blockchain. You can view all of the transactions with 100% transparency.
Aside from these fraudalent claims, the app along other scam investments or dubbed in the Philippines as "scampanies", needs you to fill out a registration form dispensing personal information such as your mobile number, and you need to find a referral code from someone who is already a member in order to successfully register.
Red Flags of Hero Mining
1) Fraud Team
If you conduct research based on the team's information, you will discover that none of these four are even remotely related to Hero Mining.
2) Fake Partnership Claims
As any fake investment firms would do, partnerships are important to boast in your landing page in order to make your project seem legit. This platform even went far as claiming that they are in partnership with GCash, the Philippines' most famous mobile wallet, mobile payments, and branchless banking service.
3) Falsified Year of Establishment
As earlier seen, the platform claims that they have been established since 2009. But this information has been falsified as data gathered shows that the domain name of heromining.com was for sale last March 6, 2022 and no source can lead that the firm really started in Boston, Massachusetts.
4) Unclear Mining Info
In the platform's app under 'Lease', it is not even stated what coin or token a user is even mining. It just shows that you need to rent on an equipment and you automatically earn USDT.
For the sake of discussion, USDT isn't even a token that can be mined since it is a stablecoin and is pegged with the value of USD. It does not rely on the PoW or PoS of an ecosystem since the purpose of it is to provide a reliable value storage which means it is not affected with high volatility of the cryptomarket.
If one was to even venture into cloud mining, the rewards you got is not fixed since it is based on the tera-hash of the equipment you have rented or purchased. Tera-hash is used to measure the speed of mining a cryptocurrency. The higher the tera-hash, the faster it enables the miners to solve for the key to transactions; the faster it gets solved, the higher the financial reward.
5) Click Farming Scheme
The HeroMining scheme is clearly of that of what you call 'Click Farming' wherein users do simple tasks to earn. A user is unable to earn if the 'Start' is failed to be clicked.
The Exit Phase
On November 19, it was announced on the the Hero Mining telegram group that the company is conducting a promo wherein users need to deposit funds to avail for it since the funds earned and shown in their dashboards are illegible for event spending.
Some users already had the feels that this was a big red flag and it would lead sooner rather than later to something devious. The promo promised a 1-day ROI and when purchased would have a duration of 7 days, wherein a user's $50 would be 6x after a week. Definitely greed blinding, right?
Many users rushed on grabbing a hold of the promo, and this is where the obvious was very evident. The recharge system of the platform was malfunctioning. Hero Mining then released a statement on their website regarding such issues stating:
And later on a more obvious statement for an exit phase of a scam was released:
The situation was already clear. The platform also halted its withdrawals, so all users can do is recharge but no payout was given. People had high hopes that the GCash maintenance was the root for the problem of the withdrawals.
On November 22, 2022 at around 10 PM, users were already panicking over what was shared as a screen showing that the app shows an error already when openned.
And the accounts of their higher mentors or bosses were already deactivated. This was another sad time for investors as they were pocketed in thinking that a 5-month investment was a legit over a year old already. According to sources, almost 10 million Philippine Pesos ($174,727) was laundered by the scammers.
