Along with the apparent benefits within the type of anonymity, accessibility, ease of use and low price of transactions, cryptocurrencies have some
Along with the apparent benefits within the type of anonymity, accessibility, ease of use and low price of transactions, cryptocurrencies have some severe drawbacks that impede their world adoption. The principle one is the connection between crypto and crime. Everybody who has studied this subject even superficially is aware of that Bitcoin (BTC) nonetheless stays a well-liked fee methodology amongst scammers and criminals on the darknet. Cryptocurrencies are very handy instruments for cash laundering, evading taxes and dishonest traders.
Right now, I’ll speak about essentially the most well-known cryptocurrency pyramids, from which tens of millions of traders suffered and whose actions amounted to billions of {dollars} in losses. These corporations labored on Ponzi schemes, named after an Italian fraudster of the early 20th century. These pyramids don’t produce items and don’t present providers — all they do is community advertising, the place every member of the pyramid invitations a number of new ones that invite the following ones and so forth.
The one individuals concerned who handle to earn in such a system are the organizers and a few early traders who managed to withdraw their cash in time. The remaining individuals within the pyramid are left with out cash, with money owed, or within the case of cryptocurrency pyramids, with no invaluable tokens.
OneCoin
OneCoin is taken into account one of many largest cryptocurrency pyramids, which functioned from 2014 to 2017, deceiving about three million individuals and defrauding traders of round $5 billion in complete. The founding father of One Coin is the Bulgarian fraudster Ruzha Ignatova. The pyramid labored in line with the classical Ponzi scheme, during which individuals obtain a reward for every new particular person invited.
The scammer satisfied her viewers that OneCoin would quickly turn into essentially the most influential cryptocurrency on the earth. There have been even guarantees to “kill Bitcoin.” It’s price noting that her coin didn’t even have its personal blockchain and was accepted solely on websites related to the pyramid.
For the primary time, the Bulgarian authorities spoke concerning the menace from fraudsters by publishing a message concerning the dangers of collaborating in OneCoin, for the reason that mission shouldn’t be a monetary instrument and isn’t managed by regulators. This brought about the pyramid to “depart” the nation and refuse to work with Bulgarian banks.
However quickly, criticism and warnings about collaborating within the scheme got here from the UK, Austria and Thailand. Italy and Germany even banned the actions of OneCoin within the international locations and blocked their accounts. Ignatova merely didn’t attend the following introduced assembly with traders in Lisbon, and was by no means seen once more. There is no such thing as a data on her whereabouts.
The USA authorities has charged Ruzha Ignatova with fraud and cash laundering. Whereas she faces 25 years of imprisonment, legislation enforcement officers nonetheless managed to arrest a few of her accomplices, amongst whom embrace her lawyer, brother and former enterprise associate.
BitConnect
One other main crypto pyramid functioned from 2016 to 2018: BitConnect. It was created by unknown builders and led by a person named Satao Nakamoto.
Individuals had to purchase BCC tokens and lock them on a particular platform, and the buying and selling bot needed to earn revenue robotically. Members of the pyramid had been promised 40% in revenue per thirty days. In keeping with the organizers of BitConnect, from an preliminary funding of $1,000, traders might count on to withdraw $50 million in three years’ time.
The primary critic of the pyramid was Vitalik Buterin, who drew consideration to the truth that the promise of 1% revenue per day is a basic Ponzi scheme. After a while, Mike Novogratz and Litecoin (LTC) creator Charlie Lee agreed with the opinion of the founding father of Ethereum. On the similar time, questions for the organizers of BitConnect got here from the UK authorities, which demanded the corporate to disclose its enterprise mannequin. But, this didn’t stop fraudsters from collaborating in crypto occasions and attracting new traders.
The U.S. authorities helped to finish this story, calling BitConnect a monetary pyramid and demanding that it stop operations. After that, the BCC token fell by 90%, traders had been left with a complete lack of $3.5 billion, and one of many organizers of the pyramid was behind bars. Divayesh Darji, the pinnacle of the Indian department of BitConnect, did, nonetheless, come out on bail in 2019.
Associated: From Bitconnect to SIM-Swap Swindling: 2018’s Greatest Scams
PlusToken
The youngest and largest monetary pyramid lately. Based in 2018, the pyramid was marketed in Chinese language WeChat with guarantees of 10%–30% of return on funding per thirty days. Round 4 million individuals grew to become individuals within the PlusToken ponzi scheme. Fraudsters allegedly advocated monetary literacy and skilled individuals to make use of cryptocurrencies, however finally aimed to transform them to Plus tokens.
On this case, justice nonetheless overtook the organizers of the scheme, and a 12 months in the past, six of them had been arrested on the request of Chinese language…