Scammers reportedly created a fake initial coin offering (ICO) to crowdfund for a startup called Giza, which they claimed would help to develop a device to store .

The ICO kicked off in January and by February had raised 2,100 Ethereum coins – at the time the equivalent of $2.4million.

Alarm bells rang when Russian firm Third Pin who had been assigned to manufacture the cryptocurrency device halted manufacture of Giza, alleging that no payment had been received.

Ivan Larionov, CEO of Third Pin announced it would be stopping its work with Giza. Third Pinn had contacted the relevant people to help design Giza’s device and quoted that $1million would be needed to create the device.

However, this quote then went unto $1.5million. Mr Larionov informed Giza’s Chief Operating Officer Marco Fike. The Third Pin CEO said Mr Finke “at that moment he said no, no way.”

Mr Larionov then said: “So next thing I said to my employees is that we will cut the contract.”

An investor named Chris, who wished to keep his surname anonymous, told CNBC: “Everything was fine, until that company that was meant to develop their device came out on the internet and said that Giza has cut ties, and it seems to be a scam and they might not be developing anything. Then things started looking fishy.”

Investors, who initially thought the project was legitimate, say warning signs, including a lack of correspondence with the founders and a falling out with the supplier, started to appear.

And eight investors told CNBC they had never met Giza’s Chief Operating Officer Marco Fike.

No-one ever had contact with Mr Fike. His Linkedin claimed he use to be a community manager at Microsoft, which the company has denied.

Giza’s website was taken down on March 9. It had been described as a startup consisting of “a group of young and ambitious programmers, hardware developers, industrial designers and marketers.”

Nicolas, another investor who asked that his surname remain anonymous, sent CNBC a trail of the money which was tracked through ethereum transactions on the blockchain.

Money from Giza’s wallet was allegedly drained over the course of two weeks and sent onto other wallets.

Former employees suspect Giza started off legitmately before turning into a scam.

Aleksander Rajic, who is listed as a software developer on Giza’s site, said his mysterious boss stopped contact in January.

He said: “When they stopped responding to my Skype and LinkedIn messages, I suspected it is a scam.”


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