Many blockchain projects seized the opportunity of the ICO-rush to scam investors of their hard-earned money. It is believed that fraudulent activities of most crypto startups stand as the number-one reason investors lost total confidence in the ICO model.
These scams are largely characterized with gold-plated promises which are largely unrealizable. Careful observation shows that a handful of these fraudulent projects follows the same terrain of a recognizable full-blown hype, yet the promise of an attractive return on investment raises the risk appetite of their unsuspecting victims.
Karatbars has been identified as a dubious blockchain-based project that has followed a similar pattern in defrauding its investors with a promise of a life-changing return on investment. There were dedicated companies like Business for Home and Netcoo which help in promoting and fanning the lies of this scandalous project.
Karatbars International is a blockchain-based project founded by Herald Seiz, Josip Heit, Alex Bodi, and Ovidiu Toma. Karatbars was conceived with a mission to revolutionize our payment system with the power of blockchain technology while promising “safe gold” with huge return on investment for its investors.
KaratGold Coin or KBC, originally called KaratBank Coin, is a blockchain-based cryptocurrency issued by Karatbars. The founders initially claimed that the KBC token is linked to physically deposited gold in the form of CashGold. All these claims were targeted at brewing unimaginable hope for its investors.
At the onset of token offering, participants were exchanging 10,000 KBC (set at 0.1g of CashGold) for fiat currency. However, due to the unregulated nature of this market, the exchange rate between KBC and fiat fluctuate quite heavily between 0.4 to 2 cents per KBC with a record 500% difference.
To further fine-tuned it in a bid to manipulate more investors into coughing out more money into the project, Karatbars promised an attractive 40% commission to their affiliates who would bring in the most people (classic of a well-organized Ponzi scheme). In addendum, they also promised a wide range of commissions mixed with the promise of financial independence for its investors.
They also employed the promotion services of the likes of Nitsa Nakos, who is unarguably known as the #1 person when it comes to developing and marketing MLM system.
KaratBank Coin was rebranded to “KaratGold Coin” in a bid to appear more valuable even though the ticker “KBC” was still retained.
They also unveiled a seeming topnotch event called the “Gold Independence Day” which was scheduled to be held on July 4, 2019 in the Bellagio, Las Vegas. This event was tasked to enable participants exchange their KBC coins for real physical gold at an incredible mouth-watering rate of 100 KBC = 1g of gold (making an exponential 40X return on investment).
All these gimmicks were poised towards making Karatbars look attractive and irresistible to unsuspecting investors.
To drive their marketing home; they further employed the premium service of top news outlets, the likes of Forbes and Cointelegraph to run targeted ads and promotionals. Even though CT recently took down those ads and promotionals, one could wonder how dubious project like Karatbars could buy their way into reputable media agencies. It's really a call for due-diligence.
Just like every other scam out there, everything was hyped to look like a once in a life-time splendorous opportunity.
Re-affirming the words of its CEO Harald Seiz on October 26, 2018. He clearly reassures the investors, adding that:
“Yes, we need a better world and I am looking forward to the future. I guarantee everyone, that they will receive 1g gold for 100 KBC each on Independence Day (July 4, 2019). The KaratGold Coin (KBC) is the first Coin actually backed by Gold.”
On the said Independence Day, KBC had peaked at 12.6 cents, with the 24-hour trading volume hitting the ceiling at the $12 million mark. Just like all pyramid schemes, the system began to implode, accompanied by a huge dump. Today it’s currently trading at 2.5 cents, an approximate 80% instant drop!
The token was worthless, it has no intrinsic value pegged to gold or whatsoever. Investors were in despair, many sold at an incredibly cheap rate to salvage the remaining portion of their investment while some other held to their bags as they were already in huge loss.
Many families lost their life-savings in the supposed life-changing investment, there was no gold to be exchanged as promised, all was a mirage. Instead of buying gold, the $500M investors’ money was diverted, the founders gifted themselves with luxury cars, villas, yachts, and private jets to say the least.
A source revealed that CEO Harald Seiz’s purchased a €10M house with money collected from investors. Needless to sugarcoat it, it is what it is. All indicators are confirming that Karatbars is a full-fledged scam. It’s Bitconnect 2.0. Bank of Namibia recently declared it a scam.
It has been revealed that Karatbars is also planning the launch of KaratNet – a supposedly “innovative” new payment system. This could be another gimmick to further brainwashed its gullible investors.