Foreign What's up Guys and welcome back to Wall Street Millennial On this channel and podcast, we cover everything related to stocks and investing. The spectacular collapse and resulting criminal investigations into Crypto Exchange FTX and its billionaire founder have captivated the financial media. But that's not the only crypto company recently exposed as a fraud. Another operation called Trade Coin Club was able to raise nearly 300 million dollars worth of bitcoin from unsuspecting victims by promising outlandish returns made possible by their trading bot. As it turns out, the scheme was a two-in-one pyramid scheme and Ponzi scheme made possible by crypto. In this video and podcast, we'll examine what this scam was, how they deceived their investors, and how it all came crumbling down. But before we get into it, remember, you can also catch us anytime by subscribing to Wall Street Millennial in podcast format on Apple podcast or Spotify just click the link in the description below. So what was Tradecoin Club or TCC TCC was a crypto, trading and multi-level marketing platform that has no longer operational. Its website has been taken down, but we can still learn a lot about it by its Facebook page and its YouTube channel. Essentially, it was a company that offered two things for users: the ability to supposedly invest your Bitcoins with their Advanced proprietary trading bot or Market TCC to others in exchange for a commission. As far as the trading capabilities, they claim to have the world's first fully automated Bitcoin trading bot to make millions of micro transactions a day. In reality, they had no such trading bot. Take a look at this promotional video touting their non-existent automatic trading system. Welcome to Tradecoin! Club The World's first auto trading cryptocurrency platform TCC trades the top 10 most active cryptocurrencies. Our proprietary software makes millions of microtransactions daily, allowing our members to benefit from Trading these digital currencies without needing to be in front of their computer to be profitable. This is actually where their first inconsistency comes in. In the video, they said that their bot did millions of micro transactions per day, but in other materials, they say that it's Millions per second. But anyway, how well did this trading platform supposedly perform before getting into their claimed investor returns? We have to understand how the platform worked. They had three different investor membership tiers: Apprentice Trader and Senior Trader. Each of these tiers had slightly different trading parameters, but they claimed that each of them had minimum trading profits on a daily basis. Even the lowest level tier promised 0.35 minimum daily returns that they called a stop loss. That point, three five percent daily return would amount to about 141 minimum annual return, which is simply orders of magnitude. Too good to be true. Of course, those numbers were just minimums in. The idea is that due to the magic of crypto, the returns could be much higher and on a shorter time scale. Here's an example of their reported investment returns. It is absolutely so fun to look at. So I Just got the stats in for the last 15 days of trading and wanted to share it with you guys because I know a lot of people have different questions that they're being asked as to how much money people are making et cetera et cetera. So from Trading alone, these are the statistics. So at Apprentice .25 Bitcoin Um, they made 32.66 US dollars. so that's about 45 Canadians and 15 days of trading in three weeks of trading at 0.25 Bitcoin the profit was 45 just on the trading. Okay, now at Um Trader so one Bitcoin they made 141.21 and 26 Cents US Dollars which works out to be 194 approximately Canadian Um, and again, that's 15 days of trading. and then the last one is five Bitcoin and they made a profit in 15 days of trading of 771.13 And that's us again. So that works out to about a thousand fifty six dollars. Canadian So um, nothing to scoff at. In terms of that, that's really, really good. You'll notice that they use extremely specific numbers in these performance reports and by reading off a printout, it gives the impression of reality. Overall, they were claiming that their investors made about 10 Returns in just 15 days of trading. that would be over 400 percent annualized. Clearly not real, or at least not sustainable. and as it would turn out, it was neither. And that brings us to the second part of the scheme. the second way that TCC clients could use the platform is by recruiting others onto the platform in a multi-level marketing setup. Multi-level marketing is a highly controversial type of operation frequently run by scammers. How it works is that each member of the scheme does two things: directly sells the schemes product and recruits other members into this game. Each sale and new member recruited results in a commission paid to the earlier members. Usually there's a fee to join which is used to pay the commissions. What ends up happening is that members are incentivized to recruit new members into this scheme irrespective of the actual product this game provides. Multi-level marketing is viewed by many as being nothing more than a pyramid scheme. Fees paid in commissions earned flow up to the top to the people who got in at the very beginning, and when not enough new members can be recruited, the scheme falls apart. In fact, many countries have banned all multi-level marketing companies in the US They are legal, but the US government has warned consumers to steer clear of them. Trade Coin Club was a multi-level marketing operation applied to crypto and they didn't even try to hide it. They even created educational materials to train their victims on how to quote build their businesses. Unquote by recruiting others into this game. Alright everybody welcome. So we are going to To Do. We're going to go back to basics and training today and what that means is some of you are really, really new to multi-level marketing and some of you aren't and some of you know what it looks like and some of you don't So we're going to take it back to the basics and just really instill what what it looks like to be running your own business in this fashion. They knew how important it is to recruit as many members into the scheme as possible, so they encourage their members to Target vulnerable people such as those who have little to no knowledge of crypto. Now the beautiful thing about this process is I think it really brings people IDs because if we sat there and said hi, welcome, go forth and figure it out yourself. I Think that would be really overwhelming for people because you have to understand that 24 hours ago they didn't know what cryptocurrency was. They also encouraged their members to Target people who are most likely to trust them, such as friends and family. but I think what the biggest keys are are, don't preclude somebody because you think that they might not understand. um I was even just I Had breakfast with my girlfriend with one of my girlfriends yesterday and I was talking to her. she was just asking what's going on my life and I wasn't selling I was just sharing everything that was happening in my life and and she was like tell me more so how do the perpetrators make money from TCC Each person who signed onto the platform had to pay a monthly fee for The Apprentice tier. it was .015 Bitcoin per month, which is the tier that guarantees the 0.35 daily trading returns. And for the Trader and Senior Trader tiers, the fee was .03 and .045 Bitcoin per month. But those fees alone wouldn't have been enough to keep the scheme afloat. TCC Also ran a Ponzi scheme where newly recruited investors' deposits were also used to pay previous investors. Like any Ponzi scheme, the promised returns were so outlandishly high that they were able to lure in many new investors. but the scheme had no hope of ever being able to actually pay back those investors over the course of a few months In early 2018, TCC First announced that it was shutting down operations. Then they announced they were not allowing existing users to withdraw their Bitcoin Instead, customers could only withdraw their funds with Tcc's brand new token called T-coin Then they cut off customer access to their accounts altogether. In the end, TCC transferred over 8 000 Bitcoin from customer deposits to the perpetrator's personal account. Over a thousand more Bitcoins were paid to the scheme's Inner Circle According to the SEC, the scheme affected a total of 100 000 victims and raised nearly 300 million dollars worth of Bitcoin. Thousands of ordinary investors lost hundreds of millions of dollars to the scam. Many of them lost their life savings and everything they had to these scammers. According to the SEC, the perpetrators and their Inner Circle are now either no longer living in the country and reside in various countries in Latin America or are living in luxury in Hawaii The Mastermind of this game has agreed to settle with the SEC, but most, if not all the stolen funds are likely gone for good, either already spent or laundered outside the hand of the law. It's unlikely that the victims will ever be fully compensated for those losses, if at all. After the countless collapses of major crypto projects, brokerages, and even exchanges in recent months, the crypto winter is obliterating ordinary investors and in most cases it's not their fault. Brokerages like Voyager Digital and Blockfy took on too much risk and collapsed projects like the Terra Luna system were built on a House of Cards from the beginning and it's looking more and more like Sam Bankman Freed was running a multi-billion dollar fraud with FCX and Alameda Research Trade coin. Club is another reminder that crypto scams are all over the place and even the small ones can cost investors hundreds of millions of dollars on this channel. we don't just talk about the cases that make the mainstream media trade coin. Club was a massive fraud in its own right and deserves to be known. The more people know about how these frauds work, the harder it will be for them to recruit more unsuspecting victims. Alright guys, that wraps it up for this video. What do you think about Trade Coin Club Do you know anyone who fell victim to it? Let us know in the comments section below. Also, don't forget to subscribe to Wall Street Millennial and podcast format on Spotify and Apple podcasts in the meantime. Thank you so much for watching and we'll see you in the next video. Wall Street Millennial Signing out.