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Author: Admin | 2025-04-27
Harder to detect.Did you know? In the 1920s, Charles Ponzi lured investors with promises of a 50% return in just a few months, claiming to invest in international mail coupons. To keep the scheme going, Ponzi used money from new investors to pay off earlier investors, creating the illusion of profit.What are cryptocurrency pyramid schemes?Cryptocurrency pyramid schemes are just like traditional ones, but with a twist — they use cryptocurrencies. Scammers lure victims by playing on their curiosity about digital coins like Bitcoin (BTC), Ether (ETH) or Solana (SOL). The typical pitch? Invest in a new coin and bring in more people to boost your returns. But the project has no real value, just like traditional pyramid schemes. These scams often disguise themselves as mining pools, investment clubs or initial coin offerings (ICOs).According to a June 2023 report, around $7.8 billion was funneled into Ponzi or pyramid schemes in 2022 alone, highlighting the widespread nature of these scams.Examples of cryptocurrency pyramid schemesHere are two examples of infamous crypto pyramid schemes that will help you understand how they work:OneCoinOneCoin, functional between 2014 and 2019, was marketed as a revolutionary cryptocurrency poised to rival Bitcoin. Investors were promised huge returns, and the project became especially popular in Europe. But in reality, it was nothing more than a pyramid scheme, with profits only made through referrals. The project didn’t add any value to the crypto space. One of its founders, Ruja Ignatova, also known as the crypto queen, has been on the run since 2017, while her co-founder, Karl Sebastian Greenwood, was sentenced to 20 years in prison in September 2023.BitconnectLaunched in 2016, Bitconnect promised large profits through an automated trading bot. Investors locked up their Bitcoin in exchange for Bitconnect tokens used on the platform. But Bitconnect was another pyramid scheme, where new investor funds paid out “profits.” Bitconnect’s token value plummeted when the scheme collapsed, leading to massive losses. The founder, Arcaro, was sentenced to 38 months in prison in September 2022.Did you know? In January 2023, investigative journalist Jamie Bartlett, host of The Missing Cryptoqueen podcast, uncovered a potential connection between Ruja Ignatova and a penthouse apartment in Kensington, London. This discovery reignited hopes of her arrest.Difference between genuine crypto projects and pyramid schemesThe key difference between a legitimate crypto project and a pyramid scheme is how they generate revenue. In real projects, value comes from innovation and service quality.
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