Online cryptocurrency gambling platform, cloudbet.com has been accused by several bettors of stealing their deposits and winnings. Scams are not uncommon in the gambling industry and are seemingly rampant in the growing, but unregulated cryptocurrency industry. There are several stories online about unaware gamblers losing their hard-earned money to fraudsters posing as legitimate businesses. In this instance, the culprit a gambling platform.
How it happened?
This story has been steadily building momentum among cryptocurrency users and gamblers on bitcointalk and reddit forums.
On the 28th of January, 2019, a bettor with the handle youngamericandream posted a message on bitcointalk.org detailing how he was cheated out of his winnings by cloudbet.com. The player deposited 5 BTC and gambled for a few weeks. At a later date he initiated a withdrawal, but left a balance of .05 BTC in his cloudbet.com account. Afterwards, he went on a hot winning streak that netted him 1.7 BTC, equivalent to $6000.
Cloudbet.com locked the player out of his account and demanded his personal identification documents for KYC (Know-Your-Customer) verification, and the player obliged. However, after giving the player the runaround, cloudbet.com used his American citizenship as the basis for confiscating his funds and closed the account.
According to the terms and conditions on the cloudbet.com website, bettors from the US are barred from playing on the platform. This begs the question of why they allow American players register, deposit and play on the platform, sometimes over long periods, especially when they're on losing runs. Is this mere incompetence on Cloudbet's part or a deliberate ploy to free roll unsuspecting players?
Why are they even asking for verification in the first place, when their platform is being sold to bettors as anonymous with no need for identification?
Youngamericandream, disclosed to cloudbet.com that he is a dual citizen of both Russia and the United States. And that he is currently on a worldwide trip outside the United States. He proved this by submitting his Russian identification, but cloudbet.com dismissed them out of hand.
Cloudbet's rejoinder
Their representative on bitcointalk.org, Ronnie, is adamant that they don't keep deposits if accounts are found to have bypassed their security checks to register from restricted territories. Once offending accounts are discovered, they refund the deposits and close the accounts. However, this is not always true as some players have come forward to dispute this. They accuse cloudbet.com of selectively scrutinizing winning players, and that losing bettors are exempted from these checks, thereby, appropriating their deposits.
Notable scam accusations against cloudbet.com
There are many stories online about how cloudbet.com abuse users trust to defraud them. Here are some examples.
Bitcointalk.org user kracc, on the 21st of May, 2018, accused cloudbet.com of closing his account after winning 3 BTC - over $20,000 then - and confiscating his deposit. Cloudbet's justification for their shady behaviour was that the player had opened multiple accounts which is against their Terms and Conditions. Apparently, this gives them the right to appropriate the player's winnings and deposit. Other users on the forum seem to have fallen to the same modus operandi.
Reddit user,Lenlo123, on the 25th of January, 2019, posted a warning on the forum describing how cloudbet.com used their Terms & Conditions to confiscate his winnings. According to the bettor, he deposited 1 BTC and lost it. Later, he deposited another 3 BTC and placed a single bet that won on plus odds, after which Cloudbet's KYC song and dance started.
The player submitted his US documents after disclosing to cloudbet.com that he was in France where the bets were placed from. He was told by their customer service representative via live chat that it was ABSOLUTELY FINE to play from France regardless of citizenship. However, after stalling for a while they refused to pay up, citing the player's American citizenship as the reason for denying him payment.
Leno123 won 4.5 BTC, currently $15,500. It is worth noting that the his US citizenship didn't stop cloudbet.com from keeping the 1 BTC - $3,400 - that he lost prior to depositing again. They triggered KYC only after the player won big and tried withdrawing his winnings. Thus, it is safe to assume that, had the player lost the second deposit he wouldn’t have been asked for verification.
Albert, a player from the Philippines took to askgamblers.com, a gambling arbitration platform to lodge a complaint about cloudbet.com for unnecessarily delaying his withdrawal. The issue was posted by the complainant on the 18th of January, 2019, and is still ongoing. The amount in question is 330.58 BTC, circa $1,129,000 using the current bitcoin exchange rate.
As is often the case with cloudbet.com, they asked the player for personal documents to complete KYC verification. He duly obliged and sent them all the documents they demanded. The documents are in his name, except for the utility bill which is in his wife's name. At the moment, cloudbet.com is using the utility bill as the sole basis for withholding the player’s withdrawal, claiming there are discrepancies in the information provided to them by Albert.
Subsequently, the player went to extraordinary lengths to prove he is who he claims to be, and has provided cloudbet.com with several documents as proof, including:
Picture of the utility bill with his wife's name.
Selfie showing his wife holding the utility bill.
Selfie showing both Albert and his wife holding the utility bill and his other identification documents.
A copy of their marriage certificate.
A copy of his property tax document .
However, cloudbet.com is still giving Albert from the Philippines the run-around and are yet to pay him.
Cloudbet.com casino user, Ginalli from Germany, on the 25th of January, 2019, posted on askgamblers.com that, cloudbet.com is withholding his withdrawal for 38 BTC, $130,000 at the current exchange rate. The player argues their logic and proof for doing so are unreasonable and contrived. The player deposited 11 BTC and won 38 BTC, but was asked for KYC as soon as he initiated a withdrawal. After submitting the required documents cloudbet.com still refused to honor the payment.
Cloudbet.com are accusing the player of cheating, stating he used external software to gain unfair advantage on the games in question. Thus, the player's account has been closed and all the funds confiscated. Nonetheless, the player Ginalli has refuted these allegations on askgamblers.com, and has succinctly argued why he didn’t do anything outside Cloudbet's Terms and Conditions. This seems to be another case where cloudbet.com is making up bogus excuses to avoid settling a big win.
Options available to victims
Victims of this type of fraud often find themselves helpless and without remedy. In many instances of cryptocurrency gambling fraud, where the operator is the guilty party, there limited options available to victims. It is near impossible to sue companies that operate anonymously and cannot be located easily. Victims are often limited to posting on forums and gambling message boards.
This is because many of these operators use shady gambling licenses that are issued in obscure offshore territories like Curacao. These questionable licensing authorities don't regulate the activities of their licensees, and does not offer any protection for players. Attempts to contact Cloudbet's licensing authorities in Montenegro and Curacao have failed, as both are still yet to respond.
Nonetheless, some victims have setup a website; cloudbetscam.com, to exchange ideas and raise awareness about the ongoing scams being perpetrated by cloudbet.com. They hope their investigations will uncover the individuals behind the cloudbet.com and sue them if possible. Additionally, victims can file online reports to the FBI, and help get the website taken down to save potential victims future losses.