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According to research, Kuailian is a “Ponzi scheme”.

June 1, 2020

The constant appreciation of cryptocurrencies during their few years was a striking element for everyone. From large mutual funds to private investors, they were interested in cryptocurrencies, but with a speculative rather than an ideological vision.

In the interest of the “quick money” that cryptocurrencies seem to offer, Ponzi schemes or fraud have come to the fore. From fraudulent ICOs to “cryptocurrencies” such as OneCoin to unique investment systems with very high investment shares. Fraud is a daily occurrence in the industry.

On this occasion, Tulip Research placed the magnifying glass on Kuailian, an investment program that ensures that investments are made in the purchase of MasterNodes or Master Nodes of different cryptocurrencies in order to offer investment returns to the participants.

Collected millions

According to research, Kuailian is a “Ponzi scheme”.According to research, Kuailian is a “Ponzi scheme”.

Kuailian asks its “investors” to pay with ether, the cryptocurrency that is native to the Ethereum ecosystem. Thanks to the public characteristics of the blockchain, Tulip Research was able to examine the public addresses at which those responsible for this system receive the funds, and observed this at the time of the investigation. You received a total of 356,623 ethers, more than $ 84 million at the price of Ethereum at the time of this writing.

According to an update by the research team on May 31 Kuailian addresses have already accumulated more than 432,512 ETH, around $ 102 million.

The investigation confirmed that this incoming money ends up in a central exchange (octopus). and from that moment it becomes impossible to keep track of where the money supplied by investors is going.

Million dollar return on MasterNodes

The Kuailian system, as highlighted in the study, offers two types of licenses Kuai in a “Smart pool“From MasterNodes that offer different returns: one with low risk, which gives a return of 6% per month, and one with medium risk, which contributes 17%. To participate in the scheme, you have to First pay a membership of $ 50 and then $ 100 for the license you want to purchase. Medium risk licenses can only be purchased after you have purchased 3 low risk licenses.

The $ 100 that was given to purchase the licenseWe return 1000 days after purchase. However, The rewards to be generated are sent daily to a wallet, which the investor specifies when purchasing the license.

However, investors also have the option of not asking about the daily deposit and applying compound interest to the “profits” they receive from their investment. If you choose to make a daily deposit, the return on investment for the low-risk license is 60-72%, while the medium-risk license is 180-204%. With compound interest, The profit of a low risk license after 1000 days would be 814%, while the average risk would be 28489%. To put it in numbers, the low risk would be obtained $ 814while in the middle risk group, $ 28,489.

Doubts about the MasterNodes system

In their research, they highlight that Kuailian is said to use a machine learning method tobest master knot“To be able to invest in and from the market.

However, research into cryptocurrencies that hold MasterNodes in the market and their profitability percentages have shown that the profitability percentages collected by the Kuailian team are incorrect. With their own data that they provide from Kuailian through the MN in which they invest, The team assessed that it “invested” 66.48% of the funds delivered in Dash Master Nodes.

Tulip Research mentioned that while Dash is the largest capitalized cryptocurrency with the MasterNodes, The annual ROI is 6.92% (as we have seen, the return is 6.26%)according to the prices of the currency at the time of the investigation. Given this data, research suggests To maintain the return on investment of 60-72% for the low-risk license and 180-204% for the medium-risk license, the other MNs in which they invest in Kuailian should have a return of 53.08% and 173.08 % achieve% respectively.

However, research shows that the lack of liquidity on the part of the other cryptocurrencies with which they are said to operate in the system makes it impossible to achieve these investment returns.

To get more accurate data, on Kuailian They claim to have invested 11.76% of the funds received in the CryptoVerificationCoin cryptocurrency (CVCC). Tulip Research’s investigation found that the coin has a single pair on the market (CVCC / BTC) and operates on a single exchange. CoinMarketCap does not show the currency’s business volume, although it does confirm a $ 6 million market cap.

At the time of the investigation, the team found that the CVCC / BTC pair order book Only 1212 coins were for sale on the entire market and at the time of writing this article was found to drop to 1197. Orders are even lower, at the time of the investigation it was found that There was only 0.76 BTC to buy the coin, our own research provided the same data.

To get a MasterNode at CVCC, you need 1000 of these coins and according to the data they collected from Tulip Research, Kuailian claims to have 115 MNto say the same thing They have 115,000 CVCC tokens, or the same to say that they have about $ 1,184,000Which is the same more than 15% of the total market capitalization of the currency.

It is also important to mention that according to the data that CoinMarketCap shows us The currency depreciated sharply in May, rising from $ 28 to $ 30 a unit to $ 11 to $ 10 it is worth today. Given the substantial percentage the currency has in the Fund’s funds, this depreciation could have affected the performance of the alleged profits it will provide to investors if they have actually invested in these tokens.

The team also focused on the investigation TradePlus (TDPS), a currency that, according to Kuailian, has invested 5.82% of the total, which corresponds to 25 master nodes. Since each master node has a price of 3000 TDPS, You have approximately 75,000 coins on your balance.

Assessment of the market movements of the currency at the time when Tulip Research carried out the investigation There were 3230 coins for saleHowever, at the time of writing this article we were able to check this in the market Only 914 tokens were sold. Orders also showed a decrease, from the 2.21 bitcoins rated in the survey to the 1.17 BTC seen today. Research has shown that with these volumes it is very difficult to obtain the liquidity required to maintain the main nodes.

Inconsistencies in your legal acts

Kuailian announces that they are registered in Europe, especially in Estonia. The investigation found that according to legal data The company was registered in Tallinn on February 11 this year, the Estonian capital, at an address that corresponds to the office of a company called Prifinance, a company that offers business creation services in Estonia for 500 euros.

Likewise, the investigation shows that the National Commission of the Spanish stock market had issued a warning about Orient’s Capital and Blue Empire, a company that later became Kuailian, according to Tulip Research.