The saga : The story behind the bitcoin gambling scam

22 April, 2014

The big story that broke out this week on Bitcointalk was from Michael Katz, a gambler who claims to have lost $340,000 (or around 700 BTC) in the scam.

Earlier this year an unassuming Michael Katz took up on a generous 200 percent bitcoin deposit bonus offer from - a spanking new website that was just released not more than a month earlier. For Michael the incentive to gamble using bitcoin is the anonymity it offers for U.S. residents. The reality is that since Black Friday there haven't been many opportunities for Americans to gamble online. i So he deposited and racked up massive losses, and then won some, making perhaps as many as 100 deposits and bitcoin transactions to ii

Michael Katz is definitely not the only player to have lost bitcoins in The lure of winning BIG in the Super Bowl Giveaway would have been too much for many starved U.S. sports betting enthusiasts. $1,000,000 Super Bowl XLVIII Giveaway!

These unbelievable prizes (A Mercedes Benz S550, 20 4G Big Screen TVs, and 200 other high value prizes) were of course never going to be given to anyone!

View the $1,000,000 Super Bowl XLVIII Giveaway Press Release (converted from email).

For everything was going pretty well till this point. However website problems started to mount very quickly and players began to complain - for a good reason.

Michael Katz soon realized that it was impossible to ever meet his bonus roll-over requirements, which meant he could never actually get the 200 percent match bonus what he signed up for. He also experienced bets disappearing and odds magically changing - retroactively. Also many of website features were falling to bits. For example, Michael claims that the mobile version of the site was a total disaster and nothing worked in it. When upgrade their site from version 1 to version 2, it wiped out his outstanding bets! So he eventually decided to take his business elsewhere and withdraw his money... and that's when became a nightmare for Michael Katz.

But before we talk more about Michael,, which is in no way related to, had its own "encounter" with the people running

On 2014-01-01 received the following email from

(Note: Names and addresses will be revealed only to an attorney acting on behalf of the players who lost money in the scam)

CoinBet Interactive Gaming, S.A.
XXXX XXXXX, Principal

December 31, 2013

TradeMark Violator "HENRY" & All Other Interested Parties WWW.COINBET.COM

Re: Trademark Violation

Dear TradeMark Violator "HENRY" & All Other Interested Parties:

My company is the owner of rights to the mark which is described in the enclosed materials ("mark"). The mark has been registered with the U.S. Patent and Trademark Office, and United States Registration No. 3,821,798 has been issued for the mark. A copy of the registration certificate is enclosed for your information.

My company has just learned of your use of this mark, which is described in the enclosed materials. Specifically, your use of the mark is the registration of "" and its intended commercial use as a result of an upcoming website launch. Your continued use is likely to cause confusion.

From the information that we have received regarding your use, our use of this mark has priority over yours based upon our earlier and continuous use, as well as the above federal registration. Therefore, your use is a violation of my company's rights.

We are demanding that you immediately stop using the mark described in the enclosed materials or any other name or mark confusingly similar. If you promptly contact us and provide written assurance that you have taken steps to discontinue such use, we will not pursue this matter further and will not assert any claim against you for money damages. Furthermore, as we acknowledge that this was likely the result of your honest mistake, we are prepared to compensate you for the transfer of domain, however you must provide us with an acceptable response before January 03, 2014 in order to receive this monetary award and avoid certain legal action against you.

Please contact us if you have any questions or need additional information. We can be contacted by phone at XXX-XXX-XXXX. Our e-mail address is


XXXX XXXXX Principal

With the email came attached the below trademark certificate. Note original PDF with address details will be emailed to an attorney only.

Coinbet trademark

The certificate is a complete fake. The real registration number 3821798 relates to a logo for ALTA VENTURES MEXICO in respect of business advisory services. does not hold any trademarks or registrations of any sorts. Yet they wanted people to think that they held these marks by using either CoinBet® or CoinBet™ all over their website and press releases and in email communications.

I received the same "trademark violation" email again on 2014-01-02.

Also on 2014-01-02, I received the following email with forged headers:

Dear Godaddy Customer,

We have tried to contact you several times regarding your domain

We have recently been contacted by the owner of this trademarked and protected name, and verified his trademark(s) and your infringement upon them.

You are in direct violation of trademark laws, as "coinbet" is a registered mark with the U.S. Patent and Trademark office. ICANN has also verified this.

If for some reason we do not get a response from you within 30 days, we will be forced to transfer this domain to the registered owner of the trademark.

We strongly advise that you contact the trademark owner directly via email at "" or by U.S. Phone XXX-XXX-XXXX, as they have indicated that they will provide compensation in return for your expedited compliance.

Failure to reply to the registered trademark holder is not recommended, and may result in an unfavorable outcome and additional damages.


GoDaddy, LLC

From the email headers it was clear that the email was not from but instead from The email forgery was also confirmed by Godaddy's domain disputes administrator.

(Godaddy actually never sends emails like the above. Any dispute over the registration of the domain name due to a trademark claim are sent through an ICANN-approved arbitration provider, or the court system. It just shows how lazy the guys were at forging documents and emails. And this is why I believe they can be caught and brought to justice for theft and inevitably for illegal gambling and possibly other things as well.)

After confronting the owners of and letting them know that I'm onto their little domain grab scam, they offered to buy the domain. However we could never agree on the amount. It was clear the guys had little money. Eventually they offered to pay around $200 per month over 60 months for the domain. I've bought and sold quite a few domains in the past and I've never heard of a five year domain purchase plan! And it was clear to me I would only ever receive the first months payment.

At this point of time the conversation (initiated by turned to my experience in the gambling industry and the possibility of working for and managing their affiliate program. I was more curious than interested in these offers since our "relationship" didn't really start on a good note. Fake trademark certificates and forged email headers is not what one would expect from a potential employer! Besides what they were offering me was zero salary but a percentage of the "take" and possibly equity in the company. Now, I wasn't born yesterday and wasn't going to be fooled into this type of deal. They then asked me to email a photocopy of my passport, another ID or utility bill proving my name and address, and bank account details.

I would never email these items to anyone! The whole thing was getting quite bizarre and I could smell identity theft all over it. I did however keep the door open for a couple of days because I was still hoping to sell the domain for a fixed price. As good gesture I even linked to for a couple of days. Eventually I just decided to end all communication with My decision was only reinforced at a bitcoin related event in Amsterdam in February 2014. Just prior to that event did a big stupid press release which was discussed with some amazement. Basically the press release was about "bringing back legal online betting to the United States using Bitcoin". iv It didn't go down well in the bitcoin community. I was advised by a few people at the event to stay the heck away from

See photo of ad in New York Times Square. This was part of the "mega press release" they did prior to the Super Bowl. ad on Times Square, New York

Well, that's pretty much my experience with Funnily enough the last email I received from was somewhat contradictory, read the underlined keywords; "...I think you were just looking for a quick buck and took us for whatever you could. The irony in that is that you could have gotten a LOT more by just being honest and straight forward and doing what you agreed to, instead of playing games and trying to scam us for a few pennies. Best of luck to you in the future. You're going to need it." What he is referring to in regards to "took us for whatever you could" and "trying to scam us for a few pennies", is a payment of roughly 0.5 BTC that he made to me for related costs and expenses that I asked for. After all he was taking up my time so I billed them for half a BTC! And this amount is peanuts to what I earn as an affiliate marketer so it's not like I was out to scam the scammer for 0.5 BTC. But it clearly pissed him off that he actually had to pay someone even this little amount while all the time he was scheming to rip-off players out of hundreds of BTCs!

Going back to Michael Katz - he is not the only one who lost money in the scam. There are many more and the money lost could easily top a million dollars, or perhaps more.

For a conman a couple of months of work, and a million bucks or so in the pocket is probably not a bad catch. But not enough to retire on so there's no doubt that these guys will be back. That's why these con men need to be stopped now before they do more damage to the bitcoin community.

That is why I have publicly posted on Bitcointalk offering my help to Michael Katz, and to any other person who lost money on the scam, should they decide to seek legal assistance and take founders to court in the United States. To this date I have not received any contact.. perhaps because a bent Bitcointalk moderator removes my posts so no one would know about this page? sportsbook, casino, poker, payments, the backend and back-office, were all developed in Romania. backend, games, and payment systems were setup in Romania by / iii It looks like they too are now closed for business as server is longer found and has only a contact form.

The company offered cheap template-based online casino setups starting from just $5k a pop plus running costs. The template-based setup was easy to replicate (there were literally tens of sites out there similar to but the backend, to which I had access to for a short time, was average, bordering on amateurish.

I've worked in the online gambling industry for over 10 years and have used various backend systems by Microgaming and Playtech. So I know what a professional gambling backend system looks like.

So I'm not at all surprised that Michael Katz claims his bets disappeared after was upgraded to version 2. The software upgrade would have been the executed by / and being amateurs at best, version 1 data was probably overwritten and wiped out by the upgrade to version 2.

I believe the failed software upgrade would have been a major set back for and a big contributing factor forcing the closure of the site and the decision "to do a runner". It is possible that / closed shop first leaving the hanging on as long as they could?!

At the end of the day a sports betting or casino site is very complex and the risks are huge for anyone operating such a service. Inexperienced bookmakers can be taken to the cleaners very quickly by a couple of clever wiseguys.

I will continue to post updates to this page as things develop.

Perhaps one day a lawyer will email me asking for information that could reveal the identities, addresses, and phone numbers of the founders?

Why no links to Bitcointalk?

I would link to Bitcointalk from this page but they deleted my post that contained a link to this page. So I won't link to them either. This is what they wrote to me:

A reply of yours, quoted below, was deleted by a Bitcoin Forum moderator. Posts are most frequently deleted because they are off-topic, though they can also be deleted for other reasons. In the future, please avoid posting things that need to be deleted.

There are disturbing things going on in this popular bitcoin forum. Getting censored is not what I expected from the most popular bitcoin forum especially when others are able to link to their stories. And somehow my story doesn't qualify! So I am "off topic" while people who don't even know who was running, or who setup the website of the admin system, are "on topic" possibly by copying information from this page. Just unbelievably stupid Bitcointalk moderator, or perhaps this moderator is sending the traffic to his own website.

Is the rabbit hole getting deeper or just a dumb Bitcointalk moderator who can't see who is more qualified to write about, me or some random jackass who rewrote this and other articles and published as his own.


i) Wikipedia. United States v. Scheinberg (Black Friday info).

ii) Michael Katz. My 3 bitcoin deposit addresses and deposits to

February 19th - February 26th

February 28th - March 7th

March 7th - March 9th

iii) / (domain inactive) (See archived)

iv) Press Release: CoinBet® Launches a "Game Changing" Bitcoin Processing Online Casino, SportsBook, & Poker Site. Just a couple of links to some major sites where the press release was published. Also a PR Newswire Visibility report on the press release.

Baltimore Business Journal (389,000 Visitors/Day)

Boston Globe (561,000 Visitors/Day)

Yahoo! Finance (51,804,000 Visitors/Day).

PR Newswire Visibility Report.