Anatomy of a Crypto Fraud: USDZ

Have you heard of the latest and greatest stablecoin by the name USDZ?

Let’s hope not…but if you have I really hope you didn’t fall victim to this unfortunate crypto scam.  Scams in crypto are nothing new but with stablecoins proving their value in this time of volatility, new US dollar-backed coins are likely to draw attention.  According to a press release dated, March 2, 2020; “Stablecoins play a crucial role in the cryptosystem. They allow more people to access the benefits of blockchain without the risk of sharp price fluctuations. They also provide a solid basis for traders, investors, sellers, and other players who want to keep their profits or assets. Basically, backing a coin with less volatile conventional assets such as the US dollar or gold makes it more stable, thus providing a safer alternative for all players in the crypto community.

The quoted language taps into newer and uninitiated investors and traders by validating exactly what stablecoins are and what they do.  The press release went on to state, “USDZ stablecoins are issued on Ethereum blockchain as ERC-20 tokens, which means compatibility with most software, hardware wallets, exchanges, and other projects. It is developed to become a simple, transparent, and reliable stable coin. For this reason, it does not use a hidden bank account or any special algorithm. Dollar collateral for each USDZ stablecoin is distributed among different bank accounts belonging to trust companies that are not affiliated with each other.”  This language let’s an unsuspecting investor know that there is an easy onramp to obtain the token and that there is an appearance of compliance.  Confidence is buttressed further when the press release describes their team, “USDZ Capital Group consists of professionals with extensive experience in major companies such as Lloyds Banking Group, Wincor Nixdorf, Deloitte, Danske Bank.” Additionally, they had all of the social media channels like Facebook, Twitter, LinkedIn, and Telegram, which once again gives someone comfort that they are a legitimate outfit.

Most people were introduced to this project from banner ads from CoinMarketCap (CMC), which is where the red flags start to fly.  I’m not saying all ads posted on this site are a scam, but I can’t tell you how many ads I saw on CoinMarketCap during the rise of BitConnect.  Another red flag was the fact that they were selling at the coin at a 33% bonus, which doesn’t make sense for a stablecoin that is supposed to be pegged at a dollar.  Lastly, there was no press beyond the release that did not allow for further research into the project because in actuality there was nothing there.  A couple of weeks later, the website and all of the social media had disappeared as quickly as the graft materialized on the crypto scene.

To close, remember it should take more than an ad on CMC and a press release before you invest your hard earned dollars on an up and coming crypto project. Anyone can put up a website and a social media channel, so do your best to do deeper research on a project by looking for a marketing footprint into mainstream sources and if all else fails there’s always more established stablecoin projects like Dai, USDCoin (USDC), and TrueUSD (TUSD).