Spanish crypto project Arbistar suspected of exit scam

The Arbistar 2.0 company halted its trading bot Community Bot, blocking the accounts of 32,000 users. After this, analytical firm Tulip Research suspected the developer of a scam.

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The trading instrument promised a daily yield of 1% from Bitcoin trading with a minimum investment of €3,000. Users could also receive additional payouts under a referral program.

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But on September 12, Arbicorp representatives announced that the Arbistar 2.0 structure halted the trading bot. The alleged reason was a fault they had not noticed for nearly a year. Because of this, the service paid out 28% more profit than was actually earned.

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“To ensure that no one loses, we will freeze the Community Bot accounts of all clients and return the funds,” the company said.

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The exact losses at Arbicorp were not disclosed, but Tulip Research analysts estimated them at $1 billion — about 97,000 BTC at the average rate on September 12.

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ARBISTAR: A $1,000,000,000 Ponzi

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1/ Brief explanation of how this figure was obtained:

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Arbistar has used BTCPayServer during the last year taking advantage of the PayJoin functionality to hide the money trail.

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— Tulip Research (@TulipResearch) September 14, 2020

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The firm noticed not only signs of a pyramid scheme in Arbistar. Later it found a link with the Russian darknet marketplace Hydra Market.

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The address from which Arbistar paid 274 users on 23/03/2019 received the bitcoins from an address that, in the same transaction, also sent btc to 18 accounts linked to Hydra Market: the Russian black market best known on the Darknet. pic.twitter.com/qcPLlxl3Ln

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— Tulip Research (@TulipResearch) September 16, 2020

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On Friday, September 25, CEO Santi Fuentes, in an interview with Cointelegraph, said that the error in the system linking the market and the Community Bot was caused by the development team. After its discovery, the company declined to cooperate with them.

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Asked about losses, Fuentes said, “this is an important figure, but it is not related to what the media say.” He said the company would return the funds to users.

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In a statement dated September 19, Arbistar chief explained that funds would be paid out every day “to approximately 100 clients.”

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A few days later Fuentes issued a special statement emphasising that the service with 120,000 users “is not closed.” He did not disclose the amount of the damage.

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Recall, earlier in the exit-scam were suspected DeFi project LV Finance. Analysts say the organizers forged audit results to misappropriate investors’ funds.

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