Analyst Ronnie Moas Reversal: DIG/Arbitrade Probably A Scam

 

Seaborn Hall, 12/23/18, Updated 12/24/18, Updated 12/28/18, most recent update in red

Check back for updates in the next few days.

 

The DIG/Arbitrade situation has blown up recently – DIG has fallen 85% in the last month – with the likelihood still being that it is a well orchestrated scam. Sifting through the information and players and their opinions and tweets and re-tweets is complex and confusing.

There is still about a one in ten chance that there are legitimate players in this operation who will come forward and pull things together. If that happens, from here it will take a lot of time, probably into 2020.

What is now clear is that the primary three to five up-front operators have questionable backgrounds with numerous red flags that have just come to light. In the last week Moas publicly called on Arbitrade to prove they have title to $15 billion in gold bullion as claimed.

Diseased trees do not produce good, healthy fruit. If there are some good legitimate people involved in this who have also been scammed, then maybe it can experience some form of resurrection in the distant future. At present – with SEC, FINRA, FBI, and other notifications to agencies of alleged wrongdoing that may spur pending investigations – that does not appear likely.

I would like to apologize to anyone who got involved in DIG because I told them about it or because it was featured on this site. I hope that you followed our consistently held out advice on speculative investments (all crypto) – “Don’t invest more than you can stand to lose.”

The DIG situation is still developing, disheartening, confusing, and bleak. We break it down for you below.

 

Recent News From Analyst Ronnie Moas vs Various Responses

Ronnie Moas has recommended DIG since approximately the summer of 2017. According to a Moas tweet on or around 12/16/18 (see below), he believes that he was scammed and sucked in to a deceptive operation by team members of Arbitrade/DIG.

Moas’ current price target on DIG is $0.00. To see his latest statement on what happened and the actions he is taking, go here.

There are responses from Ronnie’s subscribers and others on Twitter and the web who variously believe him to be at fault or DIG/Arbitrade to still be a valid enterprise. Others don’t care whether it is valid or not and want them to engage in a ‘pump and dump’ just so they can recover their investment and get out. They are angry at Moas for his reversal.

These Twitter Links on DIG from Ronnie Moas have been tweeted since 12/15/18. They cover various aspects of Moas’s problems with Arbitrade and the dubious, just brought to light background of some of the Arbitrade principals (read tweets and responses).

https://twitter.com/RonnieMoas/status/1074307487648616448

https://twitter.com/RonnieMoas/status/1074302180608352256

https://twitter.com/RonnieMoas/status/1074330301764169730

https://twitter.com/RonnieMoas/status/1073916556395077632

https://twitter.com/RonnieMoas/status/1074333631668215808

https://twitter.com/RonnieMoas/status/1074378138312941569

Also see this tweet where Ronnie defends his integrity: https://twitter.com/RonnieMoas/status/1074976915801473025

These are a few of the latest tweets on Arbitrade/DIG from Ronnie Moas as of publication. Be sure to read these if you read none of the others:

http://standpointresearch.ontraport.com/c/s/hB5/NYbm/s/6hE/69E/6f7ZFn/s2B4hzvFRE/P/P

https://twitter.com/RonnieMoas/status/1075203868156461057

https://twitter.com/RonnieMoas/status/1075530587476291590

In this last tweet Moas states that new information on Arbitrade came to light between November 28 and December 18, and he was forced to reverse his position on DIG.

 

Contrary View From The ‘DIG Community’

For a contrary position from someone in the ‘DIG community’ – whatever that means (he apparently has some level of Arbitrade access, like Moas did) – watch this 30 minute video interview with Wild West Crypto. If you do, make sure that you have viewed at least some of the Twitter links above first.

Keep in mind that the guy speaking – Nick – is himself heavily invested in DIG and not completely objective. He also appears to be angling for clients or subscribers himself – making him a Moas competitor that is a former subscriber with a bone to pick.

We also advise that you separate the wheat from the chaff in his statements. For example, he says that ‘there is not tangible value in crypto.’ True, for the most part (See our Are Cryptocurrencies The Best Investment Of The Decade?, Part 1, for more). But, we believe, to the best of our memory, that his comments about Moas’s tweet relative to inconsistencies in Arbitrade gold holdings are either lies or misstatements – we are Moas subscribers and we don’t remember any such Moas tweet that caved the price of DIG, as he claims.

The DIG price fell largely on its own relative to the entire crypto crash and disheartenment among Moas subscribers with long Arbitrade delays and unfulfilled promises. Also, compare his rationale for DIG continuing to be a good investment to the information Moas provides in the above links and the information summarized below.

Nick makes some good comments about not letting emotion dictate investment decisions at the very end of this video (and yet, he fails to see how his position and emotional investment in DIG may be affecting his view). Beginning about the 18:00 mark on the video, he begins to make some possibly valid points about ‘execution.’

In our opinion, it is possible that the Arbitrade team could have a shady past, and, perhaps, be partially true in their intentions, but be executing strategy and operations poorly and behind schedule. Or – something Nick does not consider – perhaps their poor execution is also combined and tangled up with poor, below standard ethics (more likely). They may be engaging in activities like mixing funds, taking skim off the top, front running, and constantly misrepresenting what is going on to Moas and others – while attempting to set up something that looks and even acts legitimate.

Perhaps this situation is different, and more complex, than either Moas or Nick are aware of currently – but read the more recent tweets above and summary from Moas below that seem to make this unlikely.

We do not buy into Nick’s ‘explanations’ and excuses for DIG/Arbitrade at this point, though we continue to hold out the slimmest of hopes that the entire operation is not a complete scam – even though it is now apparent that many of the principals are ‘shady characters,’ at best.

Meanwhile, the Aribitrade Board, Executives, and team (except for an official statement dissected in our 12/11/18 post) have been suspiciously silent.

 

Arbitrade Problems Summarized In Recent Moas Communication

A twelve page letter to subscribers, written with an anonymous co-author, lists a summary of the many problems and questions with Arbitrade/DIG at present. This is a partial summary of the Moas summary, based on Moas’s tweets and other public information, which is only a partial list of all of the problems and questions catalogued by Moas and others.

(For a complete list of problems with DIG and other recommendations, subscribe to Standpoint Research).

  • Audit of gold promised and promised but has never been substantiated [For one possible explanation of the gold and how the purchase is being handled, see this October 2018 report on the DIG crash and Arbitrade rumors. Just note that its not clear who the authors are or where they are getting their apparently inside information – directly from the same principals as Ronnie? – on Arbitrade].
  • Non-disclosure agreements, confidentiality, and security constantly used as excuses for lack of transparency
  • Bermuda government has stated Arbitrade was vetted, but Former Premier Michael Dunkley has raised serious questions (see below)
  • Questions about the integrity of Livecoin and their handling of DIG
  • Arbitrade team members have given their word and broken it multiple times when timelines were supposed to be completed in 2017
  • Questions about the current sustainability of the crypto mining business model since crypto prices have crashed
  • Where is DIG on other exchanges? 14 additional exchanges have been promised for months – not one has happened
  • There have been no conference calls to investors, as promised, no transparency, and a litany of broken promises
  • Recent and serious questions about the character, integrity, and background of major Arbitrade team players, including team executives
  • The CEO, Len Schutzman, is seemingly absent. His background includes four years with Olie, Inc. (2013-2017) as a “Consultant to the Board” and is listed as a “Key Executive” in Bloomberg’s profile (of Olie). In early 2014, Olie was accused by the SEC as operating a “Pump and Dump” and delisted.
  • Troy Hoggs, the founder, and Steve Braverman, the COO, both have dubious histories that have just come to light recently. (See links above).

Many of these issues have been raised with the Bermuda authorities now, making it increasingly unlikely that Arbitrade’s Bermuda license will be approved (Arbitrade told Moas multiple times that the license was forthcoming. Bermuda officials have just stated that Arbitrade never filed for a license).

Additions to the above summary of question marks about DIG, from various sources:

  • In the case of Thomas Carter Ronk, an Arbitrade team member, his wrongdoings may go back to at least 1999, see Disciplinary Action section of link.
  • Former Bermuda Premier MIchael Dunkley wrote a recent opinion piece for Bermuda News questioning whether the vetting process of the current Bermuda government towards Arbitrade was complete and comprehensive.
  • Recently appointed Arbitrade COO Stephen Braverman has multiple red flags in his Broker Check and when searched on FINRA.

 

CS History Relative To Arbitrade/DIG

CS did its own due diligence on Arbitrade/DIG in the summer of 2017 when Moas first recommended it. Our online research at the time also revealed no red flags.

We began to speak positively about it and initially bought positions into it when it was between $.07 and $.12. At its height DIG reached about $.28, an approximate 300% gain. According to Moas’ forecast it was to hit $.50 with potential for $1.00 and more eventually.

CS began to express public skepticism with Arbitrade/DIG as early as a 7/13/18 post:

“DIG – Arbitrade – Cryptobontix Still Speculative And Must Prove Themself…DIG, the crypto, and Abitrade or Cryptobontix, as the related companies are known, is still a speculative investment and investors may lose all of their money. CS is downgrading our outlook on the profitability of investment to 50-50 from 60-40 until the company proves that it can keep its word and perform on promises.”

In an 11/16/18 post we said this (emphasis placed this date in bold/italics):

“CS has eyeballed the analyst recommending DIG and the current COO of DIG [Steve Braverman] and they ‘seem’ like straight up people. On the other hand, there is something that we can’t put our finger on here – some kind of uneasy feeling – and we are not sure what it is at present. It is entirely possible that we could be missing something – in either direction…As we have been saying all along, DIG is a speculative investment, don’t invest more than you can stand to lose – there have been various scams in this industry, so it is always good to be careful even when investing speculatively.”

On October 12th, in an update and post, we said this:

“As a final note, though this opportunity sounded good – and continues to sound good, especially with the backing of Ronnie Moas, who by all appearances is a high performing stock and crypto analyst with a lot of integrity – CS has become increasingly skeptical that this opportunity will pay off. The world of crypto has become highly competitive and increasingly unstable, uncertain, and volatile during 2018 and there is absolutely no guarantee that the Arbitrade team will be able to pull off this massive challenge. Even if the price of DIG rises – which we still expect – this does not mean that the long term viability of Arbitrade, or DIG, is certain.”

Further back, on 9/30/18, we were still on board, though, for the second time, expressing skeptical optimism:

“If this is a scam, it is a really good one. There is also the possibility that the Arbitrade executives and team are in over their heads and the whole operation will fall apart before all of the complex and disparate elements come together. Considering the resume of various executives, this seems unlikely.”

As early as May 2, 2018 we said this:

“Any one of these events [referring to promises Arbitrade needs to keep relative to gold, website exchange, etc], which could occur in a slightly different order, could drive the price of DIG higher, up to its all time high or even higher (its all time high is about $.28). Further delays could result in a lower price.”

Since that time there has been nothing but delays and stalling tactics.

Steve Braverman was just appointed as the new Arbitrade COO in July 2018, so his resume, broker check, etc. was not flagged as primarily important in any initial research done in August to September 2017 when initial DIG purchases were made. Other primary players also turned up no red flags – at that time.

 

The Current CS DIG Forecast

DIG is currently below 1/2 cents, in U.S. currency. CS is lowering its price forecast and extending its time forecast on DIG/Arbitrade. In light of all of the above information there only a small chance that this is not a scam at this point. Moas’ price forecast of $0.00 seems likely.

However, if by some miracle there is a corporate turn around, the chance for a price rebound is a (remote) possibility. Considering all of the negative communication about to come out (Moas has filed SEC, FINRA, FBI, and other complaints) we would not expect any significant rebound in 2019 unless the Arbitrade team pulls a rabbit out of a hat (and if they do, remain skeptical).

We will not be changing our strategy or actions regarding DIG from our last communication – at least at this time. Getting out now means almost no return of funds anyway.

 

The Current State Of The Arbitrade/DIG versus Analyst Ronnie Moas, Conundrum

After extreme positivity for over a year, Ronnie Moas suddenly reversed his position on DIG and the Arbitrade team between November 28, 2018 and December 18, 2018. This sudden turn about – after DIG had crashed with the overall crypto market, and in response to increasing questions about Arbitrade delays – is responsible for some of the negative feedback directed towards him.

The other factor is that many subscribers failed to follow his clear warnings to limit and diversify their investment in DIG. Instead they bought into the multiple times he made extremely positive statements and they invested more – some invested most or even all of their capital.

I spoke with one of these DIG investors – a 60+ year old man who had put most of his retirement into DIG. Even worse, many who went overboard were from poor countries and are now worse off than ever.

Though Moas has not conducted himself perfectly – and who would under these circumstances? – he always included warnings not to invest more than one could lose on every communication regarding DIG. In our opinion – if this really is a scam, which it appears to be – Moas got pulled into the deception and used by a group of talented deceivers who wanted to bilk everyone.

Moas has been consistently positive and even encouraging and exhortative about DIG through early November – towards the end of November he suddenly turned negative. For example, see the video in this thread. This video is typical of the passion Moas exhibited to his subscribers throughout the DIG price climb – again, while always communicating a warning or disclosure at some point (not shown on the video, but I’m guessing it was there somewhere in the conversation).

Ronnie repeatedly warned people not to put more than 1-2% into the entire crypto space and he repeatedly warned them not to invest more than they could lose in DIG. At the same time, he was extremely positive on DIG and wrote and said apparently contradictory things like suggesting that it was OK to put as much as 5% into the position. It is evident that the Arbitrade team made him a ‘believer.’

It is easy to understand how some subscribers were seduced into investing more. But, Moas consistently counseled diversification and caution – at least at the end and sometimes in the middle of positive DIG approbations. He always warned in the same context that investors could lose everything.

Moas subscribers and DIG investors who depended on him should acknowledge this and take responsibility for investment decisions they alone made. Many responsible ones have – others continue to excoriate, blame, and accuse Moas on Twitter and other venues. If this had gone the other way, they would be exalting Ronnie as an ‘Investment god.’

No analyst can be expected to catch every detail of an investment, especially in the speculative crypto space and more so when the principals (in this case, DIG/Arbitrade) are – apparently and allegedly – engaging in intentional deception and are very good at their craft. Had any of the information that has recently come to light been available a year ago it would have been multiple red flags that would have kept any sane person from investing.

That said, others out there – including The Royal Gazette writer reporting on DIG/Arbitrade – came to negative conclusions from vague warning signs earlier (a few months ago) than Ronnie or me or a lot of others. But, they were also more removed from the principals and the false ‘inside’ information that it is now apparent Arbitrade was spreading. This made it easier to remain objective.

The bottom line is that using an investment advisor, financial advisor, newsletter – or anything – should not be an excuse for not doing your own due diligence. The only exception is when you contractually give over discretion to a fiduciary, like an RIA (see Common Sense Money Interpretation Page).

I wrote a widely read piece on investor lessons from the Bernie Madoff fraud and – if this is a scam, as Moas now strongly believes – I was fooled on this one. I was only protected because I followed common sense rules not to invest too much. Crypto really is the ‘wild, wild, west’ and the rules for spotting cons are not quite the same.

For example, take note of this quote from the FINRA website regarding typical investments:

“Keep in mind that registration with the SEC does not guarantee that an investment will be a good one or immune to fraud. Likewise, lack of registration does not mean the investment lacks legitimacy. The critical difference is the extreme level of risk you assume when you invest in a company about which little or no information is publicly available.”

Crypto start-ups are not yet accountable to the SEC or to FINRA (for the most part, though regulation is evolving).

Anyone who invests in the crypto space should realize they are speculating, the risk is real, and that they may lose everything they invest. Act accordingly, risk only what you can lose, and diversify to protect yourself. This usually means that you should not invest more than 1-2% of your capital or net worth in the entire crypto space, much less one cryptocurrency.

CS issued warnings with each CS piece – or personal conversation – on DIG – ‘Only invest what you can afford to lose, because DIG is a speculative investment.’ Still, I am hurt if anyone invested in this and lost, or loses, money because they heard about it here.

 

Common Sense Money Apology, Re: DIG

In the meantime, since this now appears to be a scam – and regardless that we always cautioned this is a speculative investment:

I apologize to anyone who invested in DIG because I told them about it or because they read about it on this site. I feel terrible that anyone could have been hurt because of news on DIG here.

I especially apologize to our global readers and anyone in a developing nation.

Common Sense Interpretation is read in over 42 nations around the world (Google Analytics, December 2018) and we are deeply sorry if we contributed to anyone’s continuing or increased financial hardship. Don’t give up on investing or on taking calculated risks. Everyone fails ocassionally. Failure leads to wisdom and eventually to success.

Had we had any of the significant information noted above in August 2017 when we began featuring news about DIG here, our views about its investment viability would have been much different. We will be contemplating and cataloging the lessons from this experience and try to do much better in the future.

 

See the Common Sense Money Home Page and this link for Updated posts and information on DIG/Arbitrade.