I may be a bit slow but, finally, I’m getting suspicious and have begun to ask myself questions that, if I were smarter, I’d have asked before investing any money. Like, is there any proof GAW miners is mining anything at all? The answer to that is technically no, there isn’t. The question then becomes where are their payouts coming from then? The official answer to this is that GAW make their money by renting out their mining power to private companies and it’s this income that provides the customers with their ever diminishing payouts. Though who these companies are is a mystery. And, in any case, that seems like a peculiar business model. Why isn’t GAW’s business of the sort that its website and marketing implies it is? i.e a cloud mining service that mines bitcoin and sells shares of the mining power to customers. The fact that the thing looks like a Ponzi scheme is inescapable. A smart and more worldly person would probably have spotted that straight away.
How does slow witted person like me finally identify a Ponzi scheme then? Well, he checks his experience against the US Securities and Exchange Commission list of Ponzi Scheme red flags:
- High investment returns with little or no risk. Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. Be highly suspicious of any "guaranteed" investment opportunity.
- Overly consistent returns. Investment values tend to go up and down over time, especially those offering potentially high returns. Be suspect of an investment that continues to generate regular, positive returns regardless of overall market conditions.
- Unregistered investments. Ponzi schemes typically involve investments that have not been registered with the SEC or with state regulators. Registration is important because it provides investors with access to key information about the company’s management, products, services, and finances.
- Unlicensed sellers. Federal and state securities laws require investment professionals and their firms to be licensed or registered. Most Ponzi schemes involve unlicensed individuals or unregistered firms.
- Secretive and/or complex strategies. Avoiding investments you do not understand, or for which you cannot get complete information, is a good rule of thumb.
- Issues with paperwork. Do not accept excuses regarding why you cannot review information about an investment in writing. Also, account statement errors and inconsistencies may be signs that funds are not being invested as promised.
- Difficulty receiving payments. Be suspicious if you do not receive a payment or have difficulty cashing out your investment. Keep in mind that Ponzi scheme promoters routinely encourage participants to "roll over" investments and sometimes promise returns offering even higher returns on the amount rolled over.
Of course, GAW miners gets a few red flags but not across the board. It didn’t necessarily promise ‘high’ returns – just consistent ones that were higher than you’d receive elsewhere. Eventually these consistent and ‘higher than elsewhere’ returns became inconsistent and low. A big red flag is the company being unregistered with the Securities and Exchange Commission:
3.12 GAW as defined herein is not engaged in providing investment products, regulated commodities, or financial products of any type or kind. GAW is not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (“SEC”) or with any state securities regulatory authority, and does not offer any product or service based upon the sale or acquisition of securities or derivative based products or services. GAW is neither licensed nor qualified to provide investment advice and you are specifically and adamantly advised not to rely upon anything posted/communicated/implied or expressed by GAW. – From the GAW Miners Terms and Conditions
So, it certainly is unregistered and unlicensed. The fifth red flag is particularly interesting – GAW does indeed appear to have a secretive and/or complex strategy. Far more complex and secretive than you’d think a cloud mining service needs to be. One that involves renting out mining power to unknown private companies, making payouts based on pool estimates rather than actual payments from mining, mysterious negotiations that involve over-the-horizon promises just as soon as they’re completed and a very strange ‘store credit’ type scheme in which, if we stick with the company and mine ‘hashpoints’ we’ll be, one day, much rewarded with ‘hashcoins’ which will be very, very valuable.
Issues with paperwork? There isn’t any paperwork. I suppose this is an advantage of selling mining shares as if they are property rather than a contract which would necessarily involve a contract.
Finally, difficulty receiving payments. There have, I believe, been a fair few people who’ve had difficulties with withdrawing their money. The payments themselves have plummeted though whether that counts as a difficulty I don’t know. I’d be inclined to give GAW a pass on this one but just because I’ve not had the difficulty myself.
Anyway, I just wanted to put all that down here before I conclude that GAW looks very much like a Ponzi scheme and I’m a goddamned idiot for buying into it and before I go log-in to Zen cloud and panic buy every hashlet I own.