In addition to the obvious benefits of anonymity, access, ease of use and low transaction costs Cryptocurrencies have some serious drawbacks that prevents its worldwide adoption. The most important one is Link between cryptocurrency and crime. Anyone who has studied this topic on the surface knows that Bitcoin (BTC) is still a Payment method popular with fraudsters and criminals in the darknet. Cryptocurrencies are very practical tools for money laundering, tax evasion and investor fraud.
Today I’m going to discuss the most famous cryptocurrency pyramids, from those whose millions have suffered from investors to those whose activities have led to billions in losses. These companies worked in Ponzi plansNamed after an early 20th century Italian fraudster. These pyramids do not produce goods or servicesAll they do is network marketing where Each member of the pyramid invites several new ones that invite the following and so on.
The only ones people involved they manage to win in this system they are Organizers and some of the first investors who managed to withdraw their money on time. The remaining pyramid participants run out of money, they have debts or, in the case of cryptopyramids, no longer a valuable sign.
OneCoin is considered one of the largest cryptocurrency pyramids, which ran between 2014 and 2017, defrauded approximately three million people and defrauded investors totaling approximately $ 5 billion. The founder of One Coin is the Bulgarian fraudster Ruzha Ignatova. The pyramid worked according to the classic Ponzi scheme, in which the participants received a reward for each new person invited.
The cheater convinced his audience of what OneCoin would soon become the most influential cryptocurrency in the world. There were even promises to “kill Bitcoin”. It should be noted that your currency He didn’t even have his own blockchain and it was only accepted in the places connected to the pyramid.
For the first time The Bulgarian government spoke of the threat of fraudsters Release of a message about the risks of participating in OneCoin as the project was not a financial instrument and was not controlled by the regulators. This did The pyramid “left” the country and refused to work with the Bulgarian banks.
They later came from Great Britain, Austria and Thailand Criticism and warnings about participating in the plan. Italy and Germany followed Prohibit OneCoin activities in these countries and they blocked their accounts. Ignatova easy did not attend the next announced investors’ meeting in Lisbonand was never seen again. There is no information about his whereabouts.
The government of The United States has accused Ruzha Ignatova of fraud and money laundering. Although 25 years in prison, law enforcement officers have managed to arrest some of their accomplicesIncluding his lawyer, his brother and his former business partner.
Another great cryptopyramid worked from 2016 to 2018: BitConnect. It was created by unknown developers and It was directed by a man named Satao Nakamoto.
The participants had to Buy BCC tokens and save them on a special platform, and the Handelsbot automatically made a profit. Pyramid members were promised a 40% profit per month. According to the organizers of BitConnect from a Initial investment of $ 1,000Investors could wait Withdraw $ 50 million in three years.
The first critic of the pyramid was Vitalik Buterin, who got attention about the fact that The promise of 1% profit per day is a classic Ponzi program. After some time, Mike Novogratz and Charlie Lee, the creator of Litecoin (LTC), agreed with the opinion of the founder of Ethereum. At the same time, questions came to the BitConnect organizers from the UK government, which asked the company to disclose its business model. However, this did not prevent fraudsters from participating in crypto events and attracting new investors.
The U.S. authorities helped end this story by calling BitConnect a financial pyramid and demanding that it stop working. After that, The BCC token fell 90%, investors suffered a total loss of $ 3.5 billion, and one of the pyramid organizers went to jail. Divayesh Darji, head of BitConnect’s Indian office, was released on bail in 2019.
Related: From Bitconnect to SIM Exchange Scam – The Biggest Scams of 2018
The latest and largest financial pyramid in recent years. The pyramid founded in 2018 was also announced on Chinese WeChat promises a return on investment of 10% to 30% per month. Around four million people took part in the PlusToken-Ponzi program. Fraudsters are said to support financial education and They trained people to use cryptocurrencies, but ultimately they wanted to turn them into plus tokens.
In this case, the judiciary overtook the organizers of the plan, and a year ago Six of them were arrested at the request of the Chinese authorities. However, the $ 3 billion lost by investors could not be returned and remains with members of the PlusToken team. Last, on June 22nd, the entire amount of EOS was removed from the pyramid wallets, and very soon the same was done with all ETH tokens.
Despite the fact that these pyramids have practically stopped operating, their various “reincarnations” appear constantly and attract inexperienced investors. The government cannot protect citizens from these systems forever because their ban requires proof of a crime. In this case, The best defense is knowledge. If everyone could recognize the enormous profit margins that companies promise in exchange for investments as a warning sign Instead of a gold mine, there would be far fewer scammers.
The views, thoughts and opinions expressed here are only those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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