Crypteks Kickstarter Scam Continues to Be Ignored While New Bitcoin Scam Emerges

UPDATE (July 23, 2013): After multiple correspondences with Fahad Koumaiha, BTCBible has confirmed that Cryoniks, Inc. is a scam. The Cryoniks website and Twitter account, however, are still active.

UPDATE (June 3, 2013): BTCBible received the following email response from Fahad Koumaiha, CEO of Cryoniks, Inc:

To whom this may concern,

This is Fahad Koumiaha on behalf of Cryoniks,

 

I was recently contacted by a few people reading your site with respect to the following article:

http://btcbible.com/crypteks-kickstarter-scam-continues-to-be-ignored/

 

I thought it would be wise for me to reach out and correct a few misconceptions that were stated in the article. It is true that I have designed the CRXi and CRXii units for Cryptrade in 2010, however, I am unaffiliated with that company. It was a commissioned contract that I was very proud to successfully deliver upon. Unfortunately, I have no bearing on the business practices nor do I receive a royalty from Cryptrade. With that said, Cryoniks, Inc. and Cryptrade are not affiliated. It is rather unfortunate that I should be wrongly accused of “scamming” or of being a “serial scammer” when I have done nothing of the sort. It would behoove your staff to perhaps contact Cryptrade for a detailed explanation of their business practices.

 

Additionally, the Cryptrade ASIC model is not “configurable” nor was this ever advertised. The FrostBit™ unit itself is configurable however to diversify unit capabilities, customers will be required to upgrade the unit for the designed task; this feature has yet to be announced however is a scheduled service to commence roughly the beginning of the year. We’ve found that several customers would greatly benefit from an upgrade as opposed to purchasing a new dedicated unit as the units are considered a large investment.

 

The TechCrunch article was actually pulled due to editorial mistakes and the backlash received due to these discrepancies. We have been in contact with aforementioned syndication and have agreed on specific terms that we will honor; a testing unit is scheduled to be independently reviewed by TechCrunch and will hopefully appease skeptics.

 

There are various assumptions made in the article that are also inappropriate; a liquid-purge for example would be considered common-sense as heat-sinks are not sealed and this process would prevent cryonic liquid nitrogen from damaging key electronic components. FrostBit™ units are not to be moved during operation.

 

Regardless of the integrity or intentions of this article, I find perhaps that it would better serve all parties if a tester unit would be arranged to be reviewed by appropriate staff at “BTCbible”. The only conditions we place on our testers is that all proceeds generated (mined) during the testing-phase is to be donated to an appropriate charity and the unit returned undamaged. We can facilitate round-trip shipping of the unit provided proper shipping information. Do kindly advise.

 

I have yet to receive correspondence from BTCbible in the form of an official letter, email, etc. with respect to you “reaching out” to me. You may kindly reply to this email as per your convenience with respect to any additional questions or concerns you may wish to clarify. We will also be holding a live-event this month in San Francisco to demonstrate unit functionality as well as a Q&A session which your staff is more than welcome to attend. Approximately 20 units will be run on the Bitcoin network for demonstration purposes and an additional unit will be opened to explore our technology. Additional information will be provided during the event.

 

Thank you for your time, I look forward to your response.

 

Best Regards,

Fahad Koumaiha – CEO Cryoniks, Inc.

BTCBible has requested a tester unit and will post an update if and when the unit arrives. Any proceeds derived from unit testing will be donated to the Sean’s Outpost Pensacola Homeless Outreach project.

In what may be one of Kickstarter’s biggest daylight Internet heists, Cryptrade Inc. has walked away with nearly $200,000 from backers of a Kickstarter campaign that ended back in December 2011.

Cryptrade Inc. ran a Kickstarter campaign in December 2011 to bring into production the Crypteks CRXi Vault, a USB stick with a mechanical lock and 256bit AES hardware encryption. Cryptrade produced an award-winning website and marketing video (above) to attract Kickstarter backers. And it worked; the Kickstarter campaign successfully raised $196,404 from 989 backers.

The problem is, Cryptrade began to go silent after the campaign ended, posting fewer updates as time went on until ultimately it went completely silent. Cryptrade never delivered on their promise to produce and deliver the CRXi Vault, and has completely ignored repeated inquires and requests for refunds by its backers. As of June 1st, 2013, those backers are still trying to contact Cryptek’s founder, Fahad Koumaiha without success.

Crypteks Backers are finding little recourse.

Cryptrade Backers are finding little recourse.

Kickstarter has not yet resolved this situation, and there is little hope that it will. Despite profiting from the nearly $200,000 campaign, complaints to Kickstarter are met with a boilerplate “our hands our tied” response.

With little hope of getting a refund, one backer plans on hiring an attorney:

Time to lawyer up...

Time to lawyer up…

So how exactly does this relate to Bitcoin?

Well it turns out that Crypteks is back at it again under the name Cryoniks, Inc. and this time they’re targeting the Bitcoin community with a “1000 GH/S Cryonic Bitmining Solution” called “FrostBit.” The beautifully-designed website is eerily similar to Crypteks, and both companies are represented by the same law firm, Safford & Baker, PLLC in Bloomfield Hills, MI.

The latest Crypteks scam; caveat emptor.

The latest Crypteks (now Cryoniks) scam, the Frostbit Bitcoin miner.

Redditor hak8or specifically detailed how the Frostbit machine cannot physically exist on the basis of physics and engineering.

According to its Facebook page, Cryoniks has already met 80% of its quota for pre-orders:

According to its Facebook page, Cryoniks is actually receiving pre-orders for its fictitious $15,000 Bitcoin miner.

According to its Facebook page, Cryoniks is actually receiving pre-orders for its fictitious $15,000 Bitcoin miner.

On May 23, TechCrunch published an article interviewing Fahad Koumaiha, who was promoting the Frostbit miner. TechCrunch pulled the article as soon as some Redditors made it known that Fahad Koumaiha was a serial scammer. A Gizmodo article written in 2011 is, however, still  promoting the Crypteks CRXi Vault.