Egypt crypto investment scam: 29 arrested after thousands swept by Hoggpool

Cairo — Egyptians who invested in a cryptocurrency mining app were hit with the terrifying realization last week that the incredible profits they thought they were making boiled down to fiction. The platform, called Hoggpool, was launched in August.

In a promotional video, a man introduced the company with a claim that it was founded in Colorado in
2019 and invested in pioneering industries, from “life science technology” to “space tech and blockchain”. He called it “one of the leading energy providers worldwide” and said it offered “cryptocurrency mining at all levels.”

Potential investors were offered various plans starting at just around $10, with a fixed profit promised of $1 per day over a specified period. The investment options ranged up to an $800 crypto-mining “machine” with a $55 per day payout.

Hoggpool told investors they could withdraw their money daily, minus 15% tax, or wait until the end of the month and withdraw all returns tax-free.

For Tarek Abd El-Barr, who works in medical equipment, it sounded like an incredible opportunity.

“They said they were ‘mining workers,'” he told CBS News. “Nobody in Egypt knows what coin mining is. We don’t know anything about these things. We thought it was electronic investment – that they were like Amazon or Microsoft.”

Pyramid and Ponzi schemes are nothing new in Egypt, but cryptocurrency scams are. Receptions, parties and meetings held by the people behind Hoggpool, in fancy hotels and other premises, gave users the impression that it was all overboard.

Advocates and victims told CBS News that ads on social media platforms lured some in, but for many it was acquaintances who had already been hooked.

Abd El-Barr’s brother-in-law, who was using the app and seeing consistent profits, convinced him to join. Skeptical at first, he started with an investment of just 6,000 Egyptian pounds (about $200) in February. It seemed to work as promised, as scams often do, and he got his money back with a profit, so he tripled his investment.

The platform’s biggest and latest offering was a new “fund of deposit” feature, which users were told could earn as much as five times the value of their existing investment in just five days. Abd El-Barr was skeptical again, but since it had worked so far, he went ahead and took the risk and threw all his savings into the app.

On February 27, when he tried to withdraw his money, it didn’t work. Two days later, on March 1, the app stopped working completely and the website disappeared.

“A lot of people took loans from banks to invest in it. I used my car installment money. Now I’ve missed two installments and the bank is calling me,” he said.

Dozens of videos of people sharing their stories and crying out for help quickly flooded the internet.

On Saturday, Egyptian authorities announced the arrest of 29 suspects, including 13 foreign nationals, in connection with the scam. Police seized 95 phones, 3,367 SIM cards and about $194,000 in Egyptian and foreign currency when they made the arrests, the interior ministry said in a statement. It said the culprits used 88 digital currency wallets to collect the money, then split it into 9,965 e-wallets and converted it to bitcoin before transferring it to accounts around the world.

The statement said the suspects had defrauded unsuspecting investors of at least 19 million pounds, or about $615,000, but many in Egypt believe the real sum was likely much higher.

Lawyer Abdulaziz Hussein told CBS News that he represented more than 1,000 victims of the scam in Cairo alone, but that as many as 800,000 people around the country may have fallen victim to the scheme, losing as much as £6bn in total – the equivalent of of around 194 million dollars.

Cryptocurrency trading is illegal in Egypt, and another lawyer representing some of the victims said it had likely prevented many from reporting the crime.

– Some of the victims may become suspects if the investigations show that they knew what they did was illegal, said Mahmoud El-Semri.

It is difficult to say how many of the victims may have continued to invest, and recruit others, knowing that the scheme involved a ban on cryptocurrency, especially as most appear to have joined through recommendations from friends or family – people they trusted and as in many cases, probably meant well.

“Most people didn’t look into the details of how this works, we just understood that they wanted to invest the money in programming,” Hussein El-Faham, a lawyer himself caught up in the scam, told CBS News.

He said it was an elaborate scam that looked and sounded legitimate, complete with forged documentation.

El-Faham said he and others heard warnings that it was a scam, but since the app basically kept paying out money as promised, it was easy to dismiss those reports. The people behind the app even used the fraud warnings as a marketing tool, he said.

El-Faham shared a screenshot with CBS News that showed the scammers warning users about “fake” apps, asking them – in poorly written Arabic – to “be careful, these scammers are low-tech and they are stupid enough to copy our system layout. Keep your eyes open.”

El-Faham lost about $6,000 on the scheme.

Dr. Sarah Zain, a physical therapist, told CBS News that she had doubts about the app even while using it, as it appeared to be an unsustainable business model, but she thought it would take longer to fall apart. She didn’t get her money out in time and ended up losing more than $7,000, which she said she needed for an upcoming surgery.

“A friend of mine and her family invested two million pounds (about $65,000), she’s not talking to anyone now,” she said. “I can’t believe we were that stupid! They brainwashed us.”

Zain also placed some blame on the government for allowing the fraudsters to operate openly for months.