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Warning for those who'd loan coins

divinitydivinity Member
edited November 2013 in General
I joined a bitcoin exchange with the initials "PM". It's based out of Russia and is used as a merchant exchange to transfer money from one source to another (eg. Okpay to BTC, BTC to E-gold, etc.). BTC-E uses them as a means to move your money so I found my way to their website one afternoon.

One option on PM was the "Currency Exchange" which allowed members to loan US dollars out and receive interest back. I'm talking about good rates:
loan $1 US, get $1.50 back in 1 day
loan $2 US, get back $4 in 1 day
loan $100 US, get back $150 in a week

They use a TS score which serves like an E-bay feedback rating, and the more transactions you make + the longer you've been a member, the higher your TS score. So naturally people want to get a good credit score and request loans for anywhere from .10 cents to $5.00 and pay them back in a timeframe of 1 day to 30 days.

Seeing dozens of offers to borrow .10 to $10 for 24 hours and be paid back anywhere from 50 to 200% interest appealed to me. I was a bit leery of why people from Russia and Ukraine would want to build up a score using mere pocket change and it did cross my mind that this could be a scam to raise one's score and then steal larger loans. However with the risk being a mere dollar, and many of the lenders having 100-160 positive reviews from other members, I went for it. Members were either unverified or verified (they'd submitted information to prove their identity including website, phone #, etc.)

The first 2 days saw me make about $5 in interest and the loans were paid back promptly.

Seeing no issue, I then lent out $80 in small loans of $1 to $20 and waited.

On the third day the fellow who borrowed $20 (from Japan) advised me he lost the money in a bet. And thus it began... one by one the loans defaulted and I saw my $80 gone. Even the members who had conducted over 150 positive trades and had feedback, and were verified, defaulted.

In the end I was out $80. I can't see why people would spend months building up over 100 positive trades only to make off with a few dollars. I suspect (but don't know for sure) that these accounts are generated to look like they have a longstanding history of good credit.

I know it was a foolish thing to do, and I knew better but I thought if you're going to put in months of time to borrow over 100 times, you're not going to skip town over a couple of US dollars. I got greedy and I got owned. :(

Avoid this site! And here's the proof... this image doesn't show that some of the same people that repaid (Given) also defaulted a few days later.

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