Bitpetite Ponzi Scheme

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Bitpetite

Bitpetite launched as an apparent bitcoin mixing service. However, the primary business was taking people's funds and using them to pay out subsequent investors (a ponzi scheme). By November 5th, 2017, the scheme had collapsed. It does not appear that investors were able to receive any of their funds back.

This exchange or platform is based in United Kingdom, or the incident targeted people primarily in United Kingdom.

About Bitpetite

"Money transfers with cutting-edge technology." "Invest and earn from 3.97% and up, daily." "Bitcoin mixer, bitcoin mixing service, bitcoin fog, bitcoin laundry."

"We provide secure money transfer services over the Bitcoin cryptocurrency network. There is a connection between you and your money, and our task is to keep this connection secret." "Our system requires dynamic funding in order to run effectively. Our investors' money improve the performance of our service." "We charge a fee for using the service. This enables us to work on developing our system and to pay out our investors their earnings."

"We provide secure money transfers over the Bitcoin network and make sure our clients' financial activity remains totally private."

"Our mission is to help make Bitcoin digital cash. To accomplish this, we mix our customers' funds with our own and by doing so anonymize the former. Your finances pass through a chain of anonymous transactions and effectively become money without financial history."

"We are always looking to expand our transaction volume, since the more funds we have in the system, the higher is the throughput capability of our service. Become our investor and make money with us!"

"Need to transfer your funds so that no one knows about it? Just contact us."

"If you select the USD option, your investment will be converted to USD at the exchange rate valid at the time of the deposit. All accruals will be also calculated in USD. Upon withdrawal, your earnings will be converted to BTC at the exchange rate valid at the time of withdrawal." "If you select the BTC option, your investment will NOT converted into USD, and your interest accruals will be calculated directly in BTC."

"Want to make even more money by bringing new investors to our project? Take advantage of our affiliate program. You can even earn without investing: we will pay you for each investment made by your referrals."

"You can go to any of these websites and they are all telling you the same kind of thing. That Bitcoin is huge (which it is) and now is your time to profit. All you need to do is sign up for free, invest Bitcoin and let them do all the hard work and heavy lifting for you."

"[A] screenshot of the Bitpetite website and it shows how much daily interest you can make if you invest Bitcoin. In the above example the investment amount is around 10 Bitcoin which is a fairly substantial amount of money as currently that would cost you around $60,000 however the daily net income from that investment is $2528 as shown."

"Biggest issue with this site is there's no information about the company: founders or VC's/backers. There are a couple of bulk standard UK Limited company docs that are hosted on the site. Anyone can buy an off the shelf company for £100 in the UK - and these are the standard docs you get. It was incorporated in February this year (2017)."

A registration in the UK listed Kathryn Kells. "Katharyn Kells previously posted is a real person, but definitely does not match the profile of a HYIP operator."

"And now they've disappeared. Very fishy!" "[W]hen it got shut down i never got my money back, out about $200 so fucking mad."

"hahaha, i was doing research. In class, I randomly remembered Bit Petite debacle a few weeks ago and some people were saying "hang on guys, they will be back as soon as the server is done being upgraded" and i remembered thinking "nah, they got scammed", so i googled bit petite and their website doesn't show up anymore either, which then brought me to this post."

"In the case of Bitpetite [CoinMarketCap] made six-figure monthly revenues for directing traffic to the now-defunct ponzi."

"We the management are aware of all the happenings." "Few weeks ago, pitpetite had a problem with pending bitcoin deposit and withdrawals." "Many deposits that our node weren't able to handle immediately, so some of them failed. Then there was an error with our payout processors."

"That was the first attack by hackers aiming to ruin Bitpetite. The Engineers noticed that on time and Bitpetite database ran a simultaneous backup." "Further observation, after this incident was a tremendous amount of people who started to troll the Bitpetite communities with negative comments and Bitpetite was able to handle this by admin banning some people."

"Very recently, Bitpetite vanished. Gone too were its customers’ cash. It guaranteed massive three digit returns, falling on percentages such as 147, seemingly always a tell. For some reason, promising 150 percent seemed gratuitous, but that crooked number at the end adds to legitimacy, I guess."

"The website flickered on and off for some time, and it’s getting pretty grim for those who relied on the company, as its social media platforms have all gone too."

"Looking back in the past months since BitPetite started, I feel like crying for spending my valuable time on it, not because they ran with the money (I got used to that, eventually), but because missing amazing legit opportunities that could have made me (any of you) 10+ times more than the shitty returns on BitPetite, BitConnect or other similar platforms out there, including USI tech."

"Guys I was one of the few people who reported bitpetite to the U.K police. Today I got a reply and they are confirming they are on the case, but they need more time . I encourage everyone to take a step forward and report them. This is a company that was registered in the UK and we must stop at least this kind of practice in the future. The scammer always think he is smart and the rest of the world are stupid. Please povide all the information u have to the authorities. It is never too late guys. Don't ever let them get away!"

It "looks like the UK police have been informed now (Suffolk Constabulary?). It seems like K Kells identity was stolen after all and steps have been made to remove her name from the register at Companies House."

"It is highly unlikely anyone's money will be returned, however, if they find the perps they could easily get pinned with identity theft fraud charges, and potentially with charge of confidence fraud, and charge of possessing, making or supplying articles for use in fraud.""

"Despite investors getting burned on alleged cryptocurrency ponzi schemes like Bitpetite, which cut and run with investors’ money, the U.S. ha[d] only brought charges against one alleged cryptocurrency scam" at the time of these events."

This exchange or platform is based in United Kingdom, or the incident targeted people primarily in United Kingdom.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

Known history of when and how the service was started.
What problems does the company or service claim to solve?
What marketing materials were used by the firm or business?
Audits performed, and excerpts that may have been included.
Business registration documents shown (fake or legitimate).
How were people recruited to participate?
Public warnings and announcements prior to the event.

Don't Include:

Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

When the service was actually started (if different than the "official story").
Who actually ran a service and their own personal history.
How the service was structured behind the scenes. (For example, there was no "trading bot".)
Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - Bitpetite Ponzi Scheme
Date	Event	Description
November 5th, 2017 12:00:00 AM	First Event	This is an expanded description of what happened and the impact. If multiple lines are necessary, add them here.

Total Amount Lost

The total amount lost is unknown.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

It is unknown how much was recovered.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

Prevention Policies

The need for centralized mixing services has been largely replaced by decentralized protocols, so this is no longer a viable model. In general, ponzi schemes require oversight to prevent, which can be provided through validation by a trusted third party or through a scheme like a Proof of Reserve. Having a known management running a project allows them to be held to account for user funds.