Ponzi Schemes | Pyramid Schemes | Bitcoin Scandal

Tarulika  |  Jul 14, 2020

Scammers and hackers across the world have raised almost $4.3 billion worth of digital assets in 2019 which was triple the money gathered in 2018 and one by four times that has been predicted for 2020 through the illicit activities in the crypto marketplace as per one of the reports of Chainalysis. Most of the dupers take the undue advantage of the innocence and lack of awareness of the beginners in the crypto space. Fake sales of token, fake promises to pay for huge profits, unregistered ICOs and many more. In this article, cautiously I will be explaining about two of the Bitcoin scandal: Ponzi schemes and Pyramid frauds. I will also share some tips to protect yourself from the rising cases of mentioned scams.

What Is A Ponzi Scheme? | Bitcoin Scandal

What is ponzi scheme Bitcoin scandal


Related to frauds, deceiving and financially sophisticated theft, Ponzi scheme is something you don’t want to get caught. Charles Ponzi in early 1900s to Bernie Madoff scam in 2000s, till now, Ponzi scheme has remained an impressive way to dupe the investors in traditional and crypto markets. In the context of crypto markets, digital assets are taken from the investor’s wallet in exchange of the promises of extraordinary returns, pretending to invest under some miraculous formula and payout early investor returns with the money of new investors trapped. 

Ponzi scheme is a Bitcoin scandal works till the incoming money from the newly trapped investors exceeds the returns of the old investors but once the freshly coming money slows down, the scheme wrapped up taking away the money, deceiving the investors. The scheme is considered as the kind of investment fraud based on fake promises for fresh assets. It seems to be that scammers are investing the money but actually investors are being manipulated and they lose the money at a rapid pace. With difficult traceability and less regulatory mechanisms, Ponzi schemes survive for longer periods.

Precautions To Fight Off Ponzi Schemes

By taking care of a few of the points while investing your money in any project, you can easily save yourself from Ponzi frauds.



  • Try not to invest your digital assets in the project if it sounds too good to be true. When someone approaches with the proposal of little risk and high return, try to search for every resource which can authenticate that the scheme is genuine and not the Ponzi.
  • ROI or Return On Investment often fluctuates with the situations of the market and are inconsistent. Always be inquisitive of the project if it has consistent returns regardless of the market conditions.
  • Double-check the documents of the project to check their registration under regulatory authorities and license of the associated sellers or team members. Ponzi schemes are generally unregistered and associated with unlicensed sellers which can save them from the radar of surveillance.
  • Most of the legitimate investment opportunities require some minimum investment qualification to be an accredited investor. So, if any new scheme does not consider any basic parameters or not even your per month salary, then you must be highly sceptical.
  • Issues related to paperwork and cashing out the received payments might be two of the eye-openers for the fraudulent schemes. Don't forget to read about the prospectus, whitepaper, payment policy and other sources to get fully aware of the project.
  • Crypto-related Ponzi schemes sometimes might have different motives like stealing of personal information and data related to investors. You must install VPN in your system which will encrypt all traffic on the web and also have a physical key to ensure your security.
  • What Is A Pyramid Scheme? | Bitcoin Scandal

    A pyramid scheme is a Bitcoin scandal has a slightly different structure than that of the treacherous Ponzi scheme. In a pyramid scheme, recruiters hire some people for some tasks and ask them to recruit more in a long chain, adding a number of layers to sustain the bottom for operation. Gradually, recruitment and sponsoring starts decreasing and financial transactions started rising. This results in handsome profits for early participants and the top of the pyramid earn up the penny only. (For instance scam of Crypto Queen)

    Bitcoin scandal

    Two of the factors, inventory loading and lack of retail sales could simply guide you that the scheme is fraudulent and the pyramid one. Company’s incentive program asked recruiters to purchase products from their site that they could ever sell mostly at higher prices, which ultimately resulted in substantial profits. Also, many companies boast the sale of products but actually, the product is getting rotten at the corner of the warehouse or just occurring between the members of the company. Thus, it is a scheme to make money from an average product by convincing or recruiting people in money-making opportunities and ultimately go off after earning the profits.

    Precautions To Fight Off Pyramid Schemes

    Pyramid schemes are a bit difficult to judge but you follow a few of the tips to fight off the pyramid schemes:


    • Projects with exaggerated claims, focussing on making the chain to sell products might be the pyramid scheme. So, you must carefully read about the team members before becoming a member.
    • Don't forget to check the actual prices of the product which need to be sold as they might be at inflated prices. Carefully review the prices of the product and review the payment policy too.
    • Be cautious of the programs claiming the secret plan, connection overseas or which is difficult to verify. Suspicious relations which are difficult to check can be pyramid schemes.
    • Many schemes dupe the customer by asking for their registration fees and then delay the launch of the company or never launch. These types of schemes may be the pyramid schemes if after initial launch they give the excuses at every stage.
    • You need to beware of the programs which try to attempt to deceive the innocent investors by promising them to invest in hi-tech or deregulated markets. These projects can turn to the Bitcoin scandal and may collapse after earning the money.
    • Thus it can be concluded that both Ponzi and pyramid schemes are lucrative because of their false promises to return high profits with a small investment. But, both are illicit activities and collapse after duping the inventors and stealing their money.

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