A Des Moines financial institution is suing an Arizona company over an alleged “bitcoin scheme” that has misled consumers into investing hundreds of thousands of dollars.
BTC Capital Management, which provides investment management services, is suing Domains by Proxy in U.S. District Court for the Southern District of Iowa, alleging unfair competition and false advertising. The lawsuit claims Domains by Proxy, based in Scottsdale, Arizona, has played a role in a scheme to promote bitcoin trading through the unauthorized use of the names and likenesses of BTC Capital Management’s executive team.
The lawsuit alleges an unknown individual — identified in the lawsuit as John Doe — has solicited business in Iowa through a highly interactive website for an entity called Bitcoin Capital. The website is hosted by Domains by Proxy, and displays an address for Bitcoin Capital that is the actual Des Moines address of BTC Capital Management.
The Bitcoin Capital site also displays the names and photos of BTC executives exactly as they appear on BTC’s own website, and displays a fraudulent business registration certificate that suggests BTC’s address is home office of Bitcoin Capital.
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BTC’s lawsuit says the company became aware of the scheme last fall when it began receiving phone calls from consumers about their Bitcoin Capital account. BTC then reported the website to the FBI’s Cyber Crime Division and made five separate requests to Domains by Proxy, asking that the BTC-related content be removed from the website. None of the five requests generated a response, according to the lawsuit.
According to the lawsuit, a Florida man allegedly learned about Bitcoin Capital from someone on Facebook who directed him to the Bitcoin Capital website containing BTC’s information. The man later reported that he had been persuaded to invest more than $300,000 in the Bitcoin Capital scheme, the lawsuit states.
More recently, BTC claims, it has received a set of voicemail messages from a Canadian consumer, seemingly angry over what he believes to be BTC’s role in the bitcoin scheme. The first message involved “name calling,” the lawsuit alleges, while the second message included the statements, “We’re gonna take you down … We got you … It’s coming.”
Citing “immediate and irreparable harm” to both BTC and to people who are misled by the website’s content, BTC is seeking an injunction to block the continued use of the company’s information, as well as an award of actual damages.
Domains by Proxy has yet to file a response to the lawsuit.
A beginner’s guide to crypto lingo
Bitcoin
Bitcoin is a cryptocurrency created in 2009 by an unknown person (or people) using the alias Satoshi Nakamoto. Unlike traditional currencies such as the US dollar, bitcoin isn’t controlled by a bank or government. Bitcoin is by far the most valuable and popular cryptocurrency in use today.
Investing in cryptocurrencies requires an appetite for risk and a whole new vocabulary.
Blockchain
A blockchain is a digital ledger and the key technology underpinning most cryptocurrencies, non-fungible tokens (more on those later) and other unique digital items.
Blockchain can be used to store all kinds of information, but so far its most common use is in recording cryptocurrency transactions. Once a transaction is made, it’s entered on this public ledger, which is managed by a global peer-to-peer network — millions of computers, in bitcoin’s case.
Blockchain is fundamental to bitcoin’s appeal: As a decentralized database, it can’t be controlled by any one person or group — unlike a fiat currency such as the US dollar, which is managed by a central bank.
Buy the f****ing dip (BTFD)
A rally cry for crypto bulls that urges investors to buy coins when prices drop.
Coinbase
The leading cryptocurrency exchange platform. The company went public in April, an event that many viewed as a turning point in the story of cryptocurrencies’ journey into the mainstream marketplace.
The mobile phone icon for the Coinbase app is shown in this photo, in New York, Tuesday, April 13, 2021. (AP Photo/Richard Drew)
Cryptocurrency
An all-digital money system made up of “coins” or “tokens” that are controlled by a decentralized ledger.
Dogecoin
The oddball of the crypto family began as a joke based on the “doge” meme in 2013. But as cryptos have broadly gained mainstream interest, dogecoin has emerged as an unexpected heavy hitter. It now has a market cap of more than $30 billion and it has surged more than 5,000% so far this year. And unlike its more popular brethren, a single dogecoin is still cheap — it hit an all-time high of about 45 cents in April. Whether or not its a smart investment remains an active question.
Elon Musk
Tesla CEO whose tweets have been known to spark rallies in cryptocurrencies such as bitcoin and dogecoin.
FILE – In this Tuesday, Dec. 1, 2020 file photo, SpaceX owner and Tesla CEO Elon Musk arrives on the red carpet for the Axel Springer media award, in Berlin, Germany. (AP Photo/Britta Pedersen, Pool, File)
Ethereum
An open-source blockchain-based software that controls the cryptocurrency Ether. It is the second-largest digital currency by market cap at nearly $300 billion.
FUD (“fear, uncertainty, doubt”)
In crypto parlance, FUD refers to negative information that weighs on an asset’s value.
Mining
The complicated process by which new bitcoins are entered into circulation. Mining is not for amateur enthusiasts: It requires high-powered computers that solve complex mathematical puzzles to create a new “block” on the blockchain.
The mining process eats up a lot of computing power and electricity, which has led to concerns about bitcoin’s environmental impact.
NFT
Non-fungible tokens, or NFTs, are pieces of digital content linked to the Ethereum blockchain. “Non-fungible” essentially means one-of-a-kind, something that can’t be replaced, unlike, for example, a dollar bill that you can replace with any other dollar bill. In the simplest terms, NFTs transform digital works of art and other collectibles into one-of-a-kind, verifiable assets.
Sophia uses a brush to paint at Hanson Robotics studio in Hong Kong on March 29, 2021. Sophia is a robot of many talents — she speaks, jokes, sings and even makes art. In March, she caused a stir in the art world when a digital work she created as part of a collaboration was sold at an auction for $688,888 in the form of a non-fungible token (NFT). (AP Photo/Vincent Yu)
Satoshi Nakamoto
The pseudonym that refers to the person (or people) who invented bitcoin. Their real identity remains unknown.
Satoshis, aka “Sats”
The smallest unit of bitcoin ever recorded on the blockchain, equal to one one-millionth of a bitcoin.
Wallet
Like the physical thing you carry your cash and cards in, a wallet in the crypto world is a place to store digital currency. The main thing you need to know about wallets is that you must never, ever lose or forget your password.
Eyonys González poses for the photo with his bitcoin wallet at his home in Havana, Cuba, Monday, March 29, 2021. (AP Photo/Ramon Espinosa)
