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Karatbars Accused of Fraud; Claims Obama’s Sister is a Supporter

Karatbars International is a project led by Harald Seiz, Josip Heit, Alex Bodi, and Ovidiu Toma. It is a global Multi-level Marketing (MLM) e-commerce business known for selling small gold bars and gift items in gold bullion. The company has come under fire recently over its past promises to revolutionize the current payment system with the power of the blockchain, ensuring a new gold standard.

A complete timeline of its scandal is available on CoinCurb. Additionally, an in-depth investigation in Karatbars International has been conducted by CoinDesk.

Karatbars: A Topical Look

The Karatbars story sparked a gold-digger atmosphere and hype among thousands of affiliates. The company had alleged that it owned gold mines in Madagascar, and it wanted to issue a cryptocurrency backed by gold. The company went on to proclaim the ownership of a presumed bank in Florida, along with the promise of creating CashGold, a new currency meant to replace the global financial system.

Various other lofty claims were also made, including a smartphone that wants to rival NSA in data security as well as ATMs from which one could theoretically draw the CashGold collector notes.

This scheme was initiated in Stuttgart, Germany, with Founder and Managing Director of Karatbars International GmbH, Harald Seiz, and his cohort, Croatian Board Member, Josip Heit. They’ve promised that the KaratGold Coin (KBC) and the Karatbank Coin (KCB) are fully backed by gold reserves.

However, sources now claim that Karatbars is nothing more than an MLM scheme. In fact, CoinDesk also reported the same regarding this issue.

However, Karatbars denies that it is an MLM company; it is rather an e-commerce company with an affiliate program, existing as a mere compensation plan set out like networking or a pyramiding structure, where you can make money if you invite people. However, at affiliate rewards ranking as high as 40%, the claims of an MLM are given weight.

How the Karatbars International System was pitched

Karatbars launched its own digital currency, which they called at first as “KaratBank Coin” and later on, changed it to “KaratGold Coin ” to gain more attention. They’ve used blockchain as a mere cover as no real protocol for tokenizing the gold has been suggested.

KBC was linked into a physically deposited gold in the form of the so-called CashGold. The notes are famously overpriced: CashGold was worth 10,000 KaratBank Coins (KBC) at the beginning.

According to icobench.com, Karatbars raised $100,000,000 with its ICO from 60% of the total supply.

Let’s assume the 60% of 12,000,000,000 is in circulation. This equals to 7,200,000,000 KBC.

Total gold needed for the buyback of 7,200,000,000 KBC:

7,200,000,000 / 100 = 72 000 000g = 72 tons

Total money needed to buy back all coins:

72 000 000g x $49.7 = $3.58 Billion

The above figures promise buyers a near 36x return. Such a phenomenal return in about a year’s time frame rivals the promises of a 1% return of the infamous Bitconnect scandal, which would have had a compounded annual return of 37.7x. That means Karatbars International promised a return just shy of Bitconnect.

How Karatbars built the Hype

Cointelegraph was earlier engaged in promoting Karatbars; it had hosted banners for Karatbars and had also listed a series of sponsored articles to promote the brand and draw exposure to the inexistent products of Karatbars.

In fact, several promotions happened after Karatbars failed to return the money on its Gold Independence Day.

However, Cointelegraph reported recently,

Be that as it may, KaratBars International as an organization is emphatically connected with scams. A basic search for KaratBars on Google returns three connections with the word “scam” in them on the first page.

Not to mention, Forbes listed Karatbars as one of 10 booming projects of 2019.

Karatbars and Celebrities 

Karatbars leveraged powerful tools beyond credible media to catch people’s attention.

The company utilized celebrities, including famous footballers, to present its legitimacy. Of course, such endorsements can be bought with ease.

The company went on to even use former US President Barack Obama’s sister, Dr. Auma Obama, to promote its MLM scam. However, this was largely a plot as she was invited as a keynote speaker on issues of poverty; Karatbars used this as a great picture opportunity to promote itself and claimed that KaratBars was endorsed by Barack Obama’s sister.

Claims Obama’s Sister is a Supporter

Karatbars’ Gold Independence Day: A Scam?

The day when the $3.58 billion worth of gold was to be paid back to people by Harald Seiz, Josip Heit, Alex Bodi, and Ovidiu Toma finally came.

Nothing happened. The self-proclaimed “Gold Independence Day” happened last July 4, 2018, in Last Vegas.

On 04.07.2019 we will host the Gold Independence Day 2019, the first time Karat Gold Coins (KBC) holders have the chance to exchange their tokens for gold. For every 100 coins you will receive 1 gram of real gold with 24 carats.

CEO Harald Seiz marked his words

We keep our promises and now for the first time makes it possible to exchange coins for physical gold. Let us surprise you with a sensational price! We have said it – we do it!

In order to make the event lavish, the company hired Gwen Stefani as the event opener. However, the reality couldn’t be faded with music. The truth is still pending to break; some observers had already warned the public about this MLM scam.

The event concluded. The music ended and there was no money for those who bought into Karatbars’ promise. To bring everything back to normal, Josip Heit released a video trying to please the investors and immediately followed with a Q&A Style piece with Harald on July 11.

Harald clearly said that KBC is worthless in the question “What is happening with our coin,” and he admitted KBC is worthless because there’s “no business” attached to it.

However, even though there was no so-called “Gold Independence Day,” Karatbars founders’ agenda was still to be revealed. Indeed, they already have a case in Canada since 2014, wherein Canadian regulator Autorité des marchés financiers (AMF) issued a warning against Karatbars. The court finds Karatbars as an “Investment Contract,” They’ve also received a pyramid scheme warning issued. Pyramid schemes are prohibited in Namibia as per the Banking Institutions Act, and on May 3rd, they finally released a statement.

There are also few ordinary crypto people on Forums and Reddit who accused the company of being a sham.

So, where did All the Karatbars Money Go?

Of course, some of it was spent on lavish company events, including payments to Gwen Stefani. Though, most of it went towards things as such:

So, where did All the Karatbars Money Go

Luxury yachts, cars, villas, clothing, travel; the standard consumption of the money made from MLM schemes.

However, the Karatbars team, Harald Seiz, Josip Heit, Alex Bodi, and Ovidiu Toma are not done yet!

This October, a supposedly “innovative” new payment system, spearheaded by Ovidiu Toma, releases under the name of KaratNet. Will history repeat itself or have investors learned a brutally painful lesson?

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Jodie Miller

Jodie Miller is experienced journalist. She holds double degree in journalism and communication. She joined our team as a content curator. She enjoys writing and curating contents related to finance and forex world.

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