As a potential crypto investment, Bitcoin is a global payment network, as stated in its whitepaper. As such, it has enabled savvy entrepreneurs to create businesses that span different continents. Crypto startups go across regions and continents. Of course, this has led to the creation of a new generation of fraudulent schemes that can take advantage of a global pool of victims. Enter GSP Crypto. By its description, it sounds like one of the promising Bitcoin projects operating in the market. But parts of its execution hint at more unscrupulous operations. So, is GSP Crypto a legit crypto investment, a scam or a Ponzi scheme? In this article, Remitano breaks down the red flags.
What is GSP Crypto?
If you went to their website, the company claimed to be a subsidiary of Global Services Plus Pte Limited. This enterprise was registered in Singapore and claimed to have physical offices at the address 10 ANSON ROAD, #22-02 INTERNATIONAL PLAZA, Tanjong Pagar, Singapore. Furthermore, information obtained using business review sites places its founding date at some point in 2016. But a more precise date could not be found in the documentation available.
The services provided by this company are described as: a wealth management system for currency exchange, and identity protection that pays 15% returns on investments made in 30 days. After this statement, they offer some vague claims to having superior technology at their disposal.
Further search for information yielded some more specific information regarding the firm's core operations. An ad from a Singaporean publicity board states, "GSP Crypto lends hardware for cryptocurrency mining, coordinating the work of traders, performs mining itself and attracts private investments." The ad also claims that profits of 75% can be made in 30 days for any investments made with the company.
The publication shares a registry document with the Accounting and Corporate Regulatory Authority (ACRA):
The registration is genuine, but it does not provide much confidence as a document from 2019 by ACRA strikes down the company 201809219Z GLOBAL SERVICES PLUS PTE. LTD. Interestingly, a search for the same registration number gives a different crypto fund in the UK named BVN Capital.
This new company has a similar description to GSP Crypto and even shares the logo's colours. People involved with the original are trying to attract new people using the same model from a different location. The parallels are too equivalent to be a coincidence.
Is GSP Crypto Investment a scam?
By now, the answer should be apparent. Yes, this was a crypto-based fraud, a Ponzi Scheme that used Bitcoin to attract naive investors and prevent transactions from being reverted. The website https://gspcrypto.com/ has been defunct for more than a year, and there is no trace of the people behind it.
After the fact, this was apparent to see. Especially since the ACRA authorities from Singapore struck down the company's registration in 2019. Hindsight is 20/20 as the adage tells. So. from the perspective of someone in 2017 or 2018, before GSP Crypto had been ousted as a scam, how could you tell it wasn't legit?
Detecting a fraud
The Securities and Exchange Commission (SEC) in the United States created a guide to detect the most common characteristics of a Ponzi Scheme. This type of fraud shares several basic components that are shared by them across nationalities and types of business. Let's look at GSP Crypto through this lens.
High crypto investment returns with little or no risk
Ponzi Schemes regularly promise a high level of return, in very short periods. Generally, an investment that is secured has a very low margin of return, and investments that have high returns are very risky. If a fund is claiming to give the best of both worlds it is highly suspicious.
GSP Crypto fits right in this category claiming returns of 75% in just 30 days. Even the claim of 15% in a month is very high. So, from the start, this was a major red flag indicating a potential scam.
Unregistered crypto investment
A fraud service never registers its investments with the local regulator. This would be very difficult to do, and so it is avoided. Financial markets are huge, so it is easy to hide in the crowd. So authorities need help tracking illegal activities.
GSP Crypto registered a name and an address but never individual investments. So, it took a lot of work to tell if these were real or fictitious. It is always good to see if an investment fund has registered economic activity in regulated markets before committing to it.
No minimum investor qualifications
Know Your Customer (KYC) is sometimes a big obstacle for new investors. It can be laborious and tedious to do KYC, but it is also beneficial. Scams only solicit a potential client to do KYC after investing.
GSP Crypto had absolutely no minimum requirements for its clients. Anyone could join and place money. This is also a major red flag.
Difficulty receiving payments
A Ponzi Scheme works by financing the payments of old investors using funds added by new ones. This structure can sustain itself for a while, as long as new people buy in, the operation can maintain a façade of legitimacy. Of course, this cycle has a limit, and once reached people have difficulty retrieving their funds until the whole thing collapses.
From reviews online about GSP Crypto, the operation had difficulties making regular payments from the start. As a result, many people complain in forums and review sites. Before committing any money, looking at these types of boards is crucial to see if the business has a good reputation.
The crypto world is filled with scams, theft, and other illegal activities. The only way to be safe is to know how these fraudulent operations work. It is essential to constantly research what new scams are in operation and thoroughly research any service you plan to use in the crypto economy.
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