A fake startup uses initial coin offering to steal $2 million in digital coins

An individual or group recently used a questionable LinkedIn profile to scam a little over $2 million from more than 1,000 investors sinking funds into a fake initial coin offering (ICO). The offering supposedly helped fund a startup called Giza Device Ltd. that was developing a device to store cryptocurrencies. The ICO took place in January, and by the beginning of February, the company held more than 2,100 Ethereum coins provided by ICO investors. Now Giza is offline and the digital coins are gone. 

Investors immediately became suspicious when the company assigned to manufacture the cryptocurrency device, Russian firm Third Pin LLC, said via its CEO that it halted manufacturing because of non-payment. Giza Chief Operating Officer Marco Fike told Third Pin that it needed to establish new operations outside Russia but didn’t provide an explanation or information. Without the funds, Third Pin couldn’t proceed with development. 

“Recently we started negotiations with cryptographic integral chips manufacturer, but, due to the position of Giza’s COO, we couldn’t even acquire critical technical documentation to start the development,” Third Pin LLC’s CEO “Ivan” said. “With a heavy heart, I am forced to tell that we are freeze all the activities related to the Giza device project.” 

What is strange about Fike is that no one has actually seen this individual, not even developers, contractors, investors, and former employees. The only evidence of his “existence” is a LinkedIn profile listing alleged fake jobs, including a community manager position denied by Microsoft. The University of Oxford is still investigating the listed Master’s degree in International Business. Even more, the profile picture links back to an Instagram account that never responded to inquiries. 

Suspicious, investors of the ICO began asking questions through a Telegram channel managed by an individual named Karina. Originally, Fike hired Karina through Freelancehunt.com and only communicated with her through Telegram and Skype chats. Communications with Fike halted around February 7 as did her paychecks from Giza. But she was just one of many individuals short-changed by the startup. 

Giza’s website disappeared last Friday, but a cached version describes the startup as “a group of young and ambitious programmers, hardware developers, industrial designers and marketers.” The proposed device included a cryptocurrency wallet, password manager, a file manager, and a two-factor authentication component. Early participants — those that invested in the ICO — were promised up to a 30 percent bonus. 

But the money is gone, drained over a period of two weeks. Although users of cryptocurrencies remain anonymous, the digital coins can still be traced, and that’s exactly what investors did in hopes of retrieving their stolen funds. There are three wallets associated with Giga outside the company’s main wallet where it originally stored the digital funds. Unfortunately, the flow of money moved through wallet No. 1 and wallet No. 2 until ending at the ShapeShift cryptocurrency exchange. 

Meanwhile, wallet No. 3 is linked to the Bee Token phishing scam in early February. During Bee Token’s official ICO, hopeful investors fell prey to an email scam that urged them to send Ethereum to hacker-controlled wallets before missing out on the offer. 

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