After promising big returns, Scottsdale, AZ-based cryptocurrency lender DavorCoin left investors with virtually zeroed out accounts – following a similar wipeout of BitConnect.
The scheme was simple; investors would lend the cryptocurrency operators real money, for which they would receive interest on their loans in the form of proprietary “DavorCoins” (DAV), which promised an interest rate as high as 48%. The site’s “Lending and profit calculator” suggested at the end of January that an investor lending $30,000 in davorcoin who agrees to lock funds up for 120 days may earn $513 per day, $3,591 per week, $15,390 per month, and $104,217 upon “capital release day” on August 23, 2018.
The company was also offering a “WELCOME TO THE ‘BE A MILLIONAIRE’ LENDING LOTTERY!!!” in a Medium.com post, adding “We will offer an amazing $1,000,000 to someone from the Davor community and many more prizes!”
Sounds legit, right?
Things were going swimmingly until cryptocurrency prices began to crash in January. After BitConnect was shut down for “illegally and fraudulently offering investments in a cryptocurrency lending program” subject to the Securities act, DavorCoin responded, saying “This does not change anything for us,” adding that DavorCoin is now “the number one lending platform in the world !!”
Shortly thereafter the price of DAV went from $177 to under a penny in less than three weeks – amid receiving a Cease and Desist from the state of Texas, alleging a variety of fraud offences in connection to DavorCoin’s offerings – as well as “misleading and deceptive statements.”
And then people had issues selling their DAV coins:
FACT: You can not withdraw DAV because there is a huge price gap between our internal exchange and Coinexchange (external), so its very understandable currently. Please stick with us while we rectify this. #dav #davorcoin @DavorCoin
— DavorCoin Support (@davor_support) February 7, 2018
Investors on Facebook and Twitter bemoaned their losses. One investor who had loaned the company $4,000 said they were left with just $9. Another said that their $20,000 loan dissolved into $23.50 upon cashout.
On February 7, DavorCoin issued a statement ending their lending program, stating “There will be certainly winners and losers in this project, as in many high-risk investments. This is also true for the whole cryptocurrency market.”
DAVOR ARE YOU SERIOUS? FOR MY 1K LOAN YOU GIVE BACK 69 DAV COINS WHILE THEY ARE WORTH 0.19 CENT?!? I SHOULD GET 5200 DAV COINS FOR THAT WITH THE CURRENT PRICE, NOT 62
— JDR77 (@JDR775) February 7, 2018
I lost 20k in bitconnect and 10k In Davor…..hope that makes you feel better.
— asif (@asif114) February 10, 2018
Please send to me, I will be finding out about legal action. Lent US$100K and returned $25 of DAV. I will not take this lying down. pic.twitter.com/RSTxIu1xiG
— Chris Page (@ChrisPageHome) February 7, 2018
@ChrisPageHome let me know if you find out anything. I had 8k in davor lost it all😢
— Justin Price (@jprice73) February 10, 2018
I lost 20k on Davor man I am also low on money my 128 dav coins are worthless now
— Andreas2005 (@vstworld2019) February 9, 2018
According to a December survey, over 18% of respondents said they bought bitcoin on credit. Of those, 22% said that they had not paid off the debt despite virtual currencies reaching all time highs. And of those who hadn’t paid back the money borrowed to purchase crypto, 70% said they believed that owning Bitcoin is worth the interest expense.