Recently we stumbled on a company – Foxminers LLC – supposedly offering cutting edge ASICs for unbeatable prices. The company claimed these ASICs are made with proprietary chips capable of mining both Sha256 and Scrypt. Upon investigating, it became increasingly apparent that the company was a complete scam, we even went as far as to visit the ‘company office’ which was simply a residential home. With the evidence provided in this article, we will expose the details on how Foxminers LLC is a fraud, and the extent to which the scammer goes in order to keep this scheme in operation.
It all started with an article one of our writers published titled “Cryptocurrency Mining Scam Warning – Foxminers“. The article warned users that Foxminers is offering too-good-to-be-true mining hardware and listed reasons as to why investors should not purchase any of their products. Furthermore, taking a closer look at the Foxminer hardware we noticed that it looks awfully similar to the older Zeus Miner chassis. Here is a pic for comparison:
You’d think the story ends here after we wrote an article warning users of a potential scam. However, two days after the story came out we received an email from firstname.lastname@example.org. Here is a copy of the email:
After reviewing the email, it was clear that something was off. Lawyers usually never send a cease & desist letter without first trying to settle the matter in a more polite way, not only that, but an attorney would never use a client’s email to issue a C&D in the first place. Furthermore, googling parts of the C&D letter led me to this page: http://jux.law/cease-desist-letter-template-example-sample-forms/. This page contains the same exact cease and desist letter template that was sent to us by Foxminers. At this point, the matter was begging to be further investigated.
The email was supposedly signed by Sack Rosending, LLP – a small law-firm based in Oakland. After visiting their site, I realized that this law-firm didn’t even deal with libel or defamation cases. A quick phone call to Sack Rosendin confirmed my suspicion. On the phone, Rosendin said that he has no idea who Foxminers are, and that he never sent out any C&D letters. So, not only is the mastermind behind Foxminers committing investment fraud, but he is also committing false impersonation, both considered Felonies in California.
The next day I get an email, this time from email@example.com stating the following:
Feel free to ignore the body of the email and instead focus on the footer, this time the fraudster impersonated Dawn Wilson, an employee at the New Dawn Media Marketing agency. Foxminers is indeed a client of New Dawn Media, however after calling Wilson at the number listed in the email, she confirmed that she has never sent me that email. She did confirm that Foxminers paid them in full to publish press releases on relevant blogs.
Those press releases can be found on Cointelegraph (Archive) and Cryptocoinsnews (Archive), it is disheartening to see other cryptocurrency blogs blatantly promote a scam that will steal their readers’ money. Foxminers also published press releases on a number of other sites, which is what first brought attention to the scam.
While all this evidence screams fraud, what really put the nail in the coffin was after I personally visited the company headquarters. After looking up the LLC registration information on the California Secretary of State website, a Los Gatos address came up. Conveniently, it was only an hour or so drive from San Francisco where The Merkle is based. After arriving at the address, I noticed that it did not resemble a business office of any sorts, instead it was a small residential apartment part of a larger complex.
I knocked at the door and a woman came out. She identified herself as Brenda, I asked her whether she knew that her name was used to register the company Foxminers LLC. She confirmed that she indeed registered the company in her name. I told her that the company is potentially engaging in illegal activity and asked her if she knew who might be responsible. She said that she was a “co-owner” of the company and that another person actually had her set up the LLC. It became obvious that the person behind this company used her name to try and break the trail between himself and the fraudulent activities occurring within the LLC.
I also warned her that I may not be the first nor the last person to knock on her door, proving to her that her address can be easily located. When victims of the scam will try and seek justice, either by themselves or with the help of law enforcement, they will head straight to the company office – which happens to be her apartment. She seemed really worried and I had a feeling that she really knew the person behind it, yet didn’t know that the company was simply set up to scam people.
Furthermore, some more investigating on the bitcointalk forums yielded more information about the mastermind of the scheme. According to bzanches69 from Bitcointalk, after almost giving Foxminers his salary of $4000 and providing them with his phone number, he received a number of calls from the company’s support number (408-877-8345). He described the man on the other line as being seriously drunk and that something like that has never happened to him. Luckily for bsanchez69 he decided to wait before buying into the scam which saved him $4000.
Last but not least, Bitcoin.com did a follow up to our article confirming our conclusion that Foxminers is a scam.
The Merkle is dedicated to protecting its viewer base, if a fraudulent company contacts us and attempts to use scare tactics WE WILL INVESTIGATE. If you have sent money to this company I urge you to get in contact with us and file a report with ic3.gov.
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