aBot (Automatic Bot)
At the time of writing, aBot is the main focus of the ARB platform and what most investors are interested in. aBot is the automated arbitrage trading bot that claims to make arbitrage trading seamless and easy for users, ultimately creating a passive income opportunity for users.In my opinion, this is the biggest red flag of the entire article, so pay close attention to this part. I will give an example of how the aBot process works from start to finish. We will use Frank as an example. Frank purchased 1000 ARB tokens during the ICO for $0.50 per token. When aBot was released, Frank wants to put his 1000 ARB tokens into aBot when the price of ARB is $1. In order for Frank to do this, he must send his tokens from his ARB wallet to the aBot wallet and input an exernal wallet address of choice where he would like profits to be distributed to.Once Frank has completed the above, the ARB tokens have now left the possession of Frank and aBot now shows that he has $1,000 USD in aBot. Each day, the profits for that day are posted and Frank receives his payout in ARB tokens to an external wallet address of choice. Frank monitors the performance of aBot over the course of a month when he finally decides to pull out his investment. At this point, he received an average of 1% per day on his investment for a total of 30%. His profits were around $300 USD over the course of the 30 days, however, the price of ARB went up to $2 over the course of the month. This means that as he was being paid out over the course of 30 days, the price was increasing and instead of receiving 1 ARB per $1, he was receiving less, up until when it hit $2 at which point he was receiving 0.5 ARB per $1. Frank will have anywhere between roughly 175 ARB to 275 ARB depending on how the price increased over the course of the month. Let’s say he received 275 ARB to be as lenient as possible.This is where the red flag is raised. Now that Frank has cashed out his aBot investment, he is supposed to get back his investment. Since he put in 1,000 ARB, he should get back 1,000 ARB right? Wrong. Now that ARB is $2 per token and he put in $1,000 at the beginning of the month, he will now receive 500 ARB ($1,000 / $2 per token). Now Frank has a grand total of 500 + 275 ARB = 775 ARB. Frank has less ARB than he had when he initially put into aBot, but he now has $1,550 worth. Had he held onto his initial 1,000 ARB and not put it into aBot, he would have had $2,000 worth.There are two issues here: A. Frank got back less ARB than he initially had, and B. the ARB platform has now pocketed 225 off of Frank. Even though ARB paid Frank 275 ARB over the course of the month, ARB still had a net gain of 225 ARB of Frank. If we assume that aBot is real and is actually making arbitrage trades, then any profits made from aBot are also pocketed by ARB. The only person losing in this situation was Frank.This issue expands more on the issue posed by ARB’s internal exchange and the regulations they have placed on trading in order to prevent price drops and encourage price appreciation. Also, the promises and speculation of massive price increases and a timeline behind them. By encouraging price appreciation, they can ensure that they are always having to pay out less tokens than were put into the platform. Does this sound familiar to anyone? BitConnect DavorCoin PonziUnfortunately, I do not have experience with aBot, so I cannot expand on what happens when the price of ARB goes down. One of two things could happen: 1. You receive more ARB than you original put in. 2. You receive the original amount of ARB that you put in, regardless of price changes. I hope that the case is not option 2, because that would be a double red flag on top of the increase in price scenario.
Unsustainable Returns
Any company that boasts the possibility of an average of 1% returns per day should be avoided, or at least approached with extreme caution. Simple calculations show why this could never be possible in any investment.The average investor in ARB is supposed to have $7,000 worth of ARB based on our calculations earlier in this article. Let’s say that a user was in ARB for a full year and deposited their earnings back into the system regularly to benefit from compound interest. 1% compounded daily for 365 days = 1.01³⁶⁵ = 37.78 * $7,000 initial investment = around $264,000. Need I even say more? This simply is not possible, let alone sustainable.
Technical Issues
Regarding technical issues, I spoke with a friend that has a small background in tech and had him do a little digging for me. He didn’t do too much and said he didn’t put too much effort into finding out these things, but they are definitely mentionable. The results of his findings are outlined below.
- IP address is publicly accessible
The IP address of arbitraging.co and the user portal are publicly accessible with a simple DNS lookup. After a bit of further research, you can easily find that ARB uses Liquid Web as their web hosting service provider, which leads us into our next issue of DDoS protectionSimply adding their website to CloudFlare could mitigate some of the risk here2. No DDoS protectionLiquid Web offers DDoS protection plans but does not offer DDoS protection by default. After a quick harmless DDoS attempt on their server IP address, it was obvious that they did not have DDoS protection.Again, adding the domain to CloudFlare can, at times, prevent DDoS attacks altogether if done properly and the server IP address is inaccessible3. Registration email was sent to spam folder with untrusted originThe email server that is sending their emails is black listed with Gmail, and likely many other mail clients.There are many solutions to this issue such as swapping to a trusted mail server or mail service such as GSuite, Office 365, Zoho — all of which almost guarantee emails will not be marked as spam4. SSL is unreliable. Sometimes it works, sometimes it doesn’t
Source: https://medium.com/@scamitraging/arbitraging-arb-platform-analysis-beware-the-scam-3f01863eba8e
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