Business & FinanceSpotlight

Nigerian Crypto Wallet’s Alleged Exit Scam Costed Users Loss of $1Million

A Nigerian cryptocurrency wallet dubbed Satowallet becomes the latest crypto platform to pull an exit scam and allegedly get away with user’s digital assets worth a whopping $1 million.

Satowallet, which is allegedly based in Dubai while its parent company Blockchain Tech Hub was operating in Nigeria, disappeared with users’ funds that are worth over $1Mil. However the firm’s CEO, Samuel Benedict adamantly continues to claim that the real reason behind the disappearance of the funds are the technical issues relating to their data center provider OVH.com

Founded back in 2017, during the time when blockchain technology and cryptoverse were both in its infancy; Satowallet was introduced to the public as an open-source Android, IOS and Web cryptocurrency wallet that supported hot storage for over 60 altcoins including major cryptocurrencies such as Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH) and Litecoin (LTC).

It had several features like offering a multi coin wallet- access to hold, receive and transact Bitcoin as well as several other altcoins with just one wallet account. It also didn’t charge any transaction fee for all supported coins between Satowallet hosted wallet addresses. In addition to that, it offered instant transaction confirmations, low trading fees, high liquidity and cryptocurrency airdrops amongst other things. According to CryptoCompare, in short, Satowallet is an All-in-one App to trade, store, invest, stake, and secure users blockchain assets.

READ ALSO: Crypto Fraud Exposed: Millions of Users Saved From BitPay’s Duplicate

For security purposes, Satowallet employed security features such as the two-factor authentication, OTP, a personal pin code, email verification, and even cold storage. All in all, it seemed very much like a legitimate platform back then.

In addition to using the aforementioned techniques to lure in customers, Satowallet also introduced its very own security token, SATOS, offering its holders quite the deal. Launched last year in October, SATOS gave investors the opportunity to earn their share of the exchange’s trading fees.

The platform promised to share 40% of its daily trading fee with SATOS holders, which prompted several members of the crypto community to buy the token in order to reap the benefits. The exchange managed to raise at least $1 million dollars through this scheme however to be completely fair, Satowallet did pay the dividend that is, until things went sour.

These entire charades started earlier this year in April, when customers started questioning the legitimacy of Satowallet. Which is around the same time that the company had announced plans for a new cryptocurrency exchange platform called ‘SatowalletEX’.

According to reports, some users of the platform claim that withdrawal services on the platform started faltering 4 months ago. In addition to that many users were unable to access their funds as well. In the face of mounting user complaints, Satowallet again insisted that the issue was due to some temporary technical problem.

READ ALSO: Bitcoin Adversary, ABN Amro Bank NV Involved in Money Laundering Scandal

Satowallet even roped in Telegram into their mess, claiming that several scammers on the messaging platform took advantage of the upgrade period and stole the client’s funds. After blaming the Telegram scammers, the company released a statement in which it claimed to have fixed the vulnerability through implementing the know-your-customer (KYC) policy.

However, reports suggest that even that was a setup. The newly implemented KYC policy served as a barrier between users and their funds because the verification process required several days; a fact that the company mentioned in their post as:

KYC will be verified speedily; where there are many influx, be assured it would not exceed 48 hours.

But things got significantly worse by August, which is when the platform went completely offline and announced that they had enforced manual withdrawals. Satowallet’s CEO revealed that all eight of its servers including wallets nodes, app and web were down. He claims to have urgently contacted OVH.com’s datacenter, home of the platform’s dedicated servers for two years, for which Satowallet was supposedly paying a fee of $6500 per month.

READ ALSO: 30 French Brands with 25,000 Point of Sales will Accept Bitcoin Payments

Apparently, after several exchanges between the two platforms that took up to several days, Sattowallet revealed that it had managed to restore the website and App back online. The only trouble was that the coins from private keys and backups were no longer there. They had vanished and conveniently without a trace. And the notorious platform only had one justification, blaming OVH for fraud and accusing the data center of trying to steal Satowallet’s servers.

Now the CEO is taking its users and the crypto community on another seeming ruse, that the exchange is open to merger and acquisition discussion with other crypto projects. Benedict last tweet on September 12, saying:

SatowalletEX is open to merger and acquisition discussion with other interesting and vibrant crypto project of any kind, as we keep putting our best to work

This incident is yet another eye-opener for the global crypto community. The crypto ecosystem is pitched as the solution to the countless problems that individuals and institutions face while living under the traditional financial system. However, the fact that the solution itself is littered with issues like ponzi schemes and security breaches cannot be overlooked.

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Abeer Anwaar

Abeer holds a Bachelors degree in Media studies and covers blockchain startups for BlockPublisher. An optimist, excels in the art of the written word and swears by the joy of all things sweet. Contact the editor at editor.startups@blockpublisher.com

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