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Lucky Block began as an ambitious cryptocurrency lottery platform, quickly garnering significant attention and raising nearly $6 million from investors during its presale. The project launched its LBLOCK V1 token on the Binance Smart Chain in January 2022, promising a decentralized and fair lottery system leveraging advanced blockchain technology. However, the journey has been marked by numerous challenges, including significant changes to the business model, financial mismanagement, and allegations of unethical practices. While there is some information available on the web, including blog posts and community discussions that touch on these issues, there has been no comprehensive coverage capturing the full extent of the questionable activities. This blog post aims to thoroughly examine the early stages of the project to provide a clearer picture of what transpired.
The initial excitement around Lucky Block was fueled by its innovative approach to the lottery industry. The LBLOCK V1 token, which included a 12% sales tax, was designed to fund the project's operations and rewards. However, the plan quickly ran into problems when centralized exchanges (CEX) refused to support the sales tax mechanism. This refusal forced the project to introduce the LBLOCK V2 token with a 0% tax rate, aimed at accommodating these exchanges. This transition created confusion among investors and highlighted a significant oversight in the project's planning.
The collapse of the original business plan due to the tax issue necessitated multiple changes. The project had to pivot, including migrating to an ERC20 token and eventually rebranding itself as a crypto casino platform. These frequent changes and the resulting delays eroded investor confidence and complicated the investment process.
The presale funds were funneled into extensive marketing activities managed by Finixio. Before these pivots, Lucky Block embarked on an aggressive marketing campaign, spending millions of dollars even though the platform was not operational. This raised questions about the necessity and appropriateness of these expenses. The marketing efforts included paying famous boxers to promote the project. According to community rumors, this decision was influenced by Scott Ryder, the founder and CEO of Lucky Block, and his personal interest in boxing. This raised concerns about the misallocation of investor funds. The exact amount paid to these boxers and how much Finixio retained remains unclear, highlighting potential misappropriation of funds.
Scott Ryder, acting as the CEO of Lucky Block, played a central role in these marketing strategies. He also had an official role at Finixio, the marketing company responsible for handling Lucky Block's promotional activities. The relationship at the time between Ryder, Lucky Block, and Finixio raises questions about the transparency and appropriateness of the fund allocations. This dual involvement suggests a potential conflict of interest, as Ryder was in a position to influence fund allocation to benefit Finixio and himself, given his direct involvement and interest in both entities.
In December 2022, Haines Watts, Finixio's auditor, resigned due to a breakdown in trust and confidence. The resignation letter highlighted several key issues:
These issues significantly undermined Finixio's and, by extension, Lucky Block's credibility. The auditor's resignation over these serious concerns adds weight to the allegations of financial mismanagement and potential fraud.
* TheHolyCoins editorial holds a copy of this official resignation letter
Finixio has been involved in various controversies, facing criticism for its use of clickbait, potentially libelous celebrity endorsements, and other unethical business practices. These issues further cast doubt on the legitimacy of Lucky Block and its management.
Summarizing the suspicious points:
Based on the available evidence, numerous indicators point to potential scam activities within Lucky Block. The combination of a flawed business plan, misallocated funds, lack of transparency, and unethical practices create a highly suspicious profile. While it is possible that circumstances have changed since these issues came to light, the initial phase of the project exhibits many red flags commonly associated with scams.
The Lucky Block case underscores the necessity for rigorous due diligence and transparency in the cryptocurrency sector. With numerous red flags indicating potential fraudulent activities, investors must exercise extreme caution. Although there may have been changes since the initial controversies, the significant issues uncovered during Lucky Block's early phase highlight the critical importance of prioritizing projects with clear, achievable plans and ethical management practices. As the crypto industry continues to evolve, this case serves as a stark reminder of the risks inherent in investing without thorough scrutiny.
At TheHolyCoins, we are committed to not only offering a curated list of the best crypto presales and IDOs available, but also educating our users about the risks involved. For those interested in learning more about the myriad forms of cryptocurrency frauds, including DeFi wallet hacks, honeypots, and phishing attacks, we recommend reading our in-depth analysis on the most common crypto scams.