BlockAura Ponzi Scheme

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BlockAura Website/Logo

BlockAura announced a blockchain platform designed for smart contracts for security tokens, emphasizing scalability and speed. The BlockAura team claimed to have created a high throughput blockchain capable of supporting 450,000 to 500,000 transactions per second without complex layer-two solutions. The project was associated with Firoz Multani and aimed to offer the cost-effective solution using its Advance-Proof-of-Stake (APoS) consensus algorithm. BlockAura's DefiAI project offered staking rewards of over 25% per month in TBAC tokens. An investor claimed substantial returns from BlockAura, believing TBAC could reach $10,000 in the next few years. The Mainnet launch was scheduled for March 3, 2023. Many investors have since reported difficulties withdrawing their funds, and the project's website is currently down.

About BlockAura

"BlockAura is a revolutionary blockchain platform built to create smart contracts for security tokens to bring back an actual store of value of the assets. It [announced] a high-throughput blockchain that will support 450–500k transactions per second without complex solutions like layer two. Firoz Multani, a Dubai-based Indian man, started the project in 2021."

"Blockchain For Global Adoption Scalable, and lightning-fast L1 blockchain BlockAura will take everything you love about Blockchain and turbocharge it."

"BlockAura ensures the ability of the platform to support increasing load of transactions, as well as increasing the number of nodes in the network to scale to global requirements with minimal energy requirement."

"BlockAura has been precision engineered to be economical at a fractional cost to per transaction powered by BlockAura’s new generation of BFT Advance-Proof-of-Stake (APoS) consensus algorithms."

"BlockAura's algorithm is all about speed to process transaction on the network faster compared to other blockchain by achieving 500,000 TPS and can scale to millions of validators with minimal hardware."

"BlockAura is a blockchain platform built on the groundbreaking algorithm Advance-Proof-of-Stake consensus protocol, and developed to pursue flexibility and security ensuring you have the ability to create apps that can appeal to the masses while maintaining the power of decentralization through it’s protocol."

"The native token TBAC [was] mainly listed on decentralized exchanges only. It made an all-time high of over $30 in July 2022"

"BlockAura is currently a Token (TBAC) deployed initially on Binance Smart Chain, Ethereum and Polygon. It is currently in the of upgrading it with a new token smart contract allowing cross chain transfers."

"To accelerate the growth of BlockAura blockchain and community reach through particpation from different industries both regional and international BlockAura has become the newest member of Singapore Blockchain Association."

"BlockAura Blockchain is currently on Testnet and is scheduled to launch its Mainnet on 3rd March 2023."

"According to a Bloomberg article, Sanjay Kamble, a 51-year-old Indian man, claims to have made over 3100% returns in eight months from BlockAura. Kamble says, “I don’t need a day job, BlockAura is the next Bitcoin.” He predicts that TBAC will reach $10,000 in two to three years."

"The Indian investor says BlockAura is the next Bitcoin. He believes TBAC will hit $10,000 in two to three years.

The project's founder claims there is no risk of losing capital, and the principal amount can be earned back in five months."

The DefiAI project of BlockAura claims to give a staking reward of more than 25% a month. Firoz Multani, the project’s founder, says, “Profit can fluctuate depending on the token’s price, but there’s no risk of losing capital, as staking returns distributed within the community help earn back the principal within five months. Those who believe in BlockAura and know that the coin will touch $100 within a year will stay.”

BlockAura Twitter:

BlockAura Homepage:

BlockAura Audit:

BlockAura CoinMarketCap:

The Reality

A smart contract audit does not confirm anything about the team behind the project, that any promises are fully backed, or that an investment is a sound financial decision.

Limited Scope Of Audit

A smart contract audit only confirms that a smart contract is free of vulnerabilities. It doesn't demonstrate that any token will retain value, that the team behind the project is credible, or that there is a viable blockchain.

The goal of this audit is to review BlockAura’s solidity implementation for its token issuance function, study potential security vulnerabilities, its general design and architecture, and uncover bugs that could compromise the software in production.

FOR AVOIDANCE OF DOUBT, THE REPORT, ITS CONTENT, ACCESS, AND/OR USAGE THEREOF, INCLUDING ANY ASSOCIATED SERVICES OR MATERIALS, SHALL NOT BE CONSIDERED OR RELIED UPON AS ANY FORM OF FINANCIAL, INVESTMENT, TAX, LEGAL, REGULATORY, OR OTHER ADVICE.

Limitations On Withdrawal Rate

[T]he staking rewards are in the form of highly illiquid native token TBAC. Furthermore, BlockAura limits the withdrawals to $250 per day. Akhilesh Agarwal invested $10,000 in BlockAura tokens in May and accumulated $25,000 in rewards over the next four months. However, he is not able to withdraw even the principal amount.

He says, “Only a handful of people made money at the start when the price of the token was rising. Now we can’t withdraw, and everyone’s money is stuck.”

What Happened

After a long period of limiting withdrawals, the BlockAura website eventually went offline and all investors with funds remaining on the platform lost their money.

Key Event Timeline - BlockAura Ponzi Scheme

Date	Event	Description
September 25th, 2022 10:45:00 PM MDT	MLM Warning Tweet	A warning tweet accuses the project of being an elaborate MLM.
October 5th, 2022	Fairyproof Audit Report Published	Blockchain firm Fairyproof completes and publishes an audit of the BlockAura smart contract.
November 30th, 2022 4:00:00 PM MST	Bloomberg Article Published	Bloomberg reports on the BlockAuro token surging 3,100%.

Technical Details

There was a reported limit imposed part-way through, which limited withdrawals to $250 per day.

Total Amount Lost

The total amount lost is unknown.

Immediate Reactions

TBD

Ultimate Outcome

TBD

The BlockAura website is presently offline.

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

Ongoing Developments

TBD

Individual Prevention Policies

Individuals can avoid losses in ponzi schemes through careful analysis of any service that claims to offer any kind of guaranteed profit. Assets should ideally be stored locally and you should own your own private keys.

Any time that you are promised any profit or benefit in exchange for an initial payment, smart contract approval, or deposit, pay special care as to whether the entity making that offer is trustworthy, actually who they say they are, and has the means to fulfill what they're promising. There are no magic algorithms providing guaranteed returns from trading or mining. Trading on average will lose money. Mining is expensive and complex. No one is going to immediately send back more than you sent them. NFT projects will rarely announce a surprise mint in only a single location. Are you fully prepared for the event your money is kept and nothing is delivered in return?

When using any third party custodial platform (such as for trading), it is important to verify that the platform has a full backing of all assets, and that assets have been secured in a proper multi-signature wallet held by several trusted and trained individuals. If this can't be validated, then users should avoid using that platform. Unfortunately, most centralized platforms today still do not provide the level of transparency and third party validation which would be necessary to ensure that assets have been kept secure and properly backed. Therefore, the most effective strategy at present remains to learn proper self custody practices and avoid using any third party custodial platforms whenever possible.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Platforms can help prevent such situations by better educating their users and ensuring that their own platform is extensively validated. An industry insurance fund may provide some relief for victims of ponzi schemes, to help prevent a total loss of all assets and provide an incentive for sharing knowledge and educating others openly.

Never take for granted the limited knowledge of users of your service and their tendency to skip past provided information. It is recommended to design a simple tutorial and quiz for new users which explains the basics of seed phrases, strong password generation, secure two-factor authentication, common fraud schemes, how ponzi schemes work, as well as other risks which are unique to the cryptocurrency space. This tutorial and quiz should ensure their understanding and be a standard part of the sign-up or download process which is difficult or impossible to skip.

All aspects of any platform should undergo a regular validation/inspection by experts. This validation should include a security audit of any smart contracts, reporting any risks to the backing (of any customer assets, ensuring treasuries or minting functions are properly secured under the control of a multi-signature wallet, and finding any inadequacies in the level of training or integrity of the team. The recommended interval is twice prior to launch or significant system upgrade, once after 3 months, and every 6 months thereafter. It is recommended that the third party performing the inspection not be repeated within a 14 month period.

Work with other industry platforms to set up a multi-signature wallet with private keys held separately by delegate signatories from seven prominent platforms and services within the industry. Establish requirements for contributions by all platforms and services, designed to be affordable for small platforms yet large enough to cover anticipated breach events. Any breach event can be brought forth by a member platform or a petition of 100 signatures for consideration by the delegate signatories. A vote of 4 or more delegate signatures is required to release any funds, which could partially or fully restore lost funds based on their assessment.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

Regulators can help prevent such situations by better educating their citizens and ensuring that regulated platforms are properly validated. An industry insurance fund may provide some relief for victims of ponzi schemes, to help prevent a total loss of all assets and provide an incentive for sharing knowledge and educating others openly.

Create a standard tutorial and quiz for all new cryptocurrency participants, which is required to be completed once per participant. This tutorial and quiz should cover the basics of proper seed phrase protection, strong password generation, secure two-factor authentication, common fraud schemes, how to detect and guard against phishing attacks, how ponzi schemes work, as well as other risks which are unique to the cryptocurrency space.

All platforms should undergo published security and risk assessments by independent third parties. Two assessments are required at founding or major upgrade, one after 3 months, and one every 6 months thereafter. The third parties must not repeat within the past 14 months. A risk assessment needs to include what assets back customer deposits and the risk of default from any third parties being lent to. The security assessment must include ensuring a proper multi-signature wallet, and that all signatories are properly trained. Assessments must be performed on social media, databases, and DNS security.

Set up a multi-signature wallet with private keys held separately by delegate signatories from seven prominent platforms and services within the industry. Establish requirements for contributions by all platforms and services within the country, designed to be affordable for small platforms yet large enough to cover anticipated breach events. Any breach event can be brought forth by a member platform or a petition of 100 signatures for consideration by the delegate signatories. A vote of 4 or more delegate signatures is required to release any funds, which could partially or fully restore lost funds based on their assessment.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.