A cryptocurrency project that appears to have raised at least $20 million through a referral-based marketing scheme has been advertising false information about its founding team members, a CoinDesk investigation has found.
The project, named BHB, was launched on December 2, 2018, and claims to offer an ethereum-based solution for peer-to-peer lending. Less than a month after its launch, though, local Chinese media outlets began to point out inconsistencies in the information provided by the company. Some have even accused the project of operating an illegal pyramid scheme.
After accusations about the company’s fraudulent operations began to pile up, CoinDesk launched their own independent investigation. The publication found that images said to represent two BHB team members have been lifted from unaffiliated university professors, who have all publicly denied any association with the project.
The project also listed invalid contact details on its website – a disconnected phone number and a supposed headquarters at a New York City address that does not exist (“22/121 Apple Street”).
The mechanism for how BHB tokens are issued and promoted has been under fire since the project launched. All tokens are issued and traded at a single exchange, called XBTC.CX. Tokens can only be bought using the U.S. dollar-pegged cryptocurrency known as tether or USDT on XBTC or Chinese yuan through XBTC’s over-the-counter WeChat groups, researches found.
Back in December, XBTC.CX announced that users who held at least 700 BHB for 24 hours were eligible to get a USDT dividend issued. The dividend would equal 7 percent of the user’s BHB holdings’ market value. In the same announcement, the exchange said that token holders could get additional USDT if they recruited other users to the exchange and had them hold BHB in an account.
Several WeChat groups have linked both BHB and XBTC.CX to at least one real person – Renbing Li, the 24-year-old founder of the Hangzhou-based venture firm MoCapital. Li reportedly denied allegations that BHB is a pyramid scheme and said it’s rather a project to “liberalize communities.”
However, it seems that pyramid scheme accusations haven’t halted operations at BHB, as the company’s data shows that $21 million in BHB is now changing hands daily for USDT.