Technology

The mechanics of a crypto-global scam

Belgian justice has not yet decided. With suspects in preventive detention since their arrest at the end of June, the investigation is continuing. It is nevertheless essential to dismantle the cogs of this apparent financial trap to the hundreds of thousands of potential victims around the world.

Retroacts. Tuesday, June 22, 2021. Some 220,000 members of Vitae, a social network in the test phase before its opening to the general public, are invited in the evening to a videoconference by the commercial director of the platform, a Flemish businessman. What they do not yet know is that with the help of Europol experts, the federal judicial police carried out around twenty searches in Belgium that day, mainly in the regions of Antwerp, Bruges and Hasselt.

Retroacts. Tuesday, June 22, 2021. Some 220,000 members of Vitae, a social network in the test phase before its opening to the general public, are invited in the evening to a videoconference by the commercial director of the platform, a Flemish businessman. What they do not yet know is that with the help of Europol experts, the federal judicial police carried out around twenty searches in Belgium that day, mainly in the regions of Antwerp, Bruges and Hasselt. Nearly 3 million euros, in cash and cryptocurrency, as well as 17 luxury vehicles are seized. The commercial director, the chief operating officer, the IT director and two other marketing managers are arrested. According to people familiar with the matter, the first two directors would have been placed under house arrest and the IT director would have been released. In the interest of the investigation which is continuing at the time of this writing, the Federal Prosecutor’s Office will not provide any additional information. However, the authorities announced that the operation targeted the probable sponsors of a criminal organization. Vitae, a public limited company founded in Zug, capital of the Swiss “Crypto Valley”, would be managed in practice by the arrested entrepreneurs. Belgian justice suspects them of operating an international financial scam of the Ponzi type through their new social media. This platform is supposed to “bring prosperity to its users” by rewarding their likes, shares and other comments with its own cryptocurrency, the utility token Vitae. The recipe for this apparent scam? It would be a “cocktail of facilities”, between the promise of easy enrichment (remuneration for simply using the social media), easy management (via tokens, without borders, permanently accessible) and easy solidarity (the famous “sharing of prosperity” promised in the white paper of the project). “I can confirm that the combination of these three elements makes that Vitae has been able to attract a lot of people, real followers. We also note that their participation goes beyond the role of simple investor, they share a certain ‘universe Vitae'” , analyzes Rik Vanreusel, partner of the Ghent law firm De Groote-De Man, underlining the uniqueness of what he fears to be a massive fraud. This lawyer specializing in criminal law supports people who consider themselves financially wronged by Vitae and intend to become a civil party soon. He does not wish to further detail the extent of the financial losses of his Belgian and international clients, but fears a scale effect, given the large number of members. Moreover, while awaiting the outcome of the investigations, the Belgian justice blocked the sites Vitae.co and Vitatoken.io. This caused the collapse of the price of the digital token, the value of which is now tending towards zero euros while the market capitalization exceeded 100 million last November. The halt imposed by Belgium on this project invoking “philanthropy” and “the emancipation of the most needy” also aroused the ire of members of Vitae, scattered on all continents but mainly active in India and In Vietnam. Since he intends to oppose the Vitae project, Me Vanreusel has tasted the medicine of those he describes as “believers”. For example, he quotes a message he received recently: “We love Vitae because it is the social network of the future. Don’t be ignored by the rapidly changing world. Bring our Vitae platform back online. Prove that our founders of Vitae are not criminals. Prove that Vitae is not a scam, a Ponzi or a pyramid scheme “. This kind of missives abound in the mailboxes and on the social networks of those involved in this affair. The investigating judge in charge of the Vitae case, Philippe Van Linthout, could attest to this when we observe the messages and videos he receives on his public profiles. “This demonstrates a real problem, that of unconscious victims”, worries the partner of the firm De Groote-De Man. The saga of the Vitae petitions would prove the victims’ lawyer right. Since June 24, a British national presented as the “leader of the women of Vitae” has already initiated three successive online petitions calling on the federal prosecutor to unblock their social media. Breaking virality records, bringing together up to 41,000 signatories from France to Australia via Ghana and Canada, the petitions were deleted on each occasion by the Change.org site hosting them for violating the rules of use. Without prejudging this court case where for the moment the presumption of innocence prevails, note that the Department of Consumer Protection of Vietnam had already hoisted the red flag about Vitae in June 2020 in the face of “signs of illegal activities of the project”. By taking a step back, we will remind you how easy it has never been to mobilize people and funds. A simple smartphone is now sufficient. Fraudulent projects borrow the codes of the start-up (societal problem, innovative solution), the ingredients of digital marketing and quickly spread through YouTube, Telegram, Facebook and other social media. Cryptocurrencies have lowered technical barriers for cross-border financial management and blockchain networks, decentralizing and automating control (or lack thereof), offering parallel systems whose ease of access is also unprecedented. These new generation scams no longer only promise extremely attractive sources of income, they add a community dimension and personal or collective development. Stakeholders, whether they are members, users, investors, have to do with financial matrices and diagrams that avoid them having to calculate at length to understand that the returns will be high. A whole rhetoric built on the figures of “pioneers”, “revolutionaries”, or the objectives of “technological prowess” and “human progress” comes to anesthetize mistrust. The domino effect and the feeling of group reinforcing the validity of the project which only “enemies” and other representatives of the establishment will criticize. However, the commercial or investment results of the participants will not be recorded on any official document, but only via the accounts and interfaces of the platforms. And in the event of a technical problem, those responsible may decline all responsibility.

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