Users cannot change their habits easily. From cash transactions to digital payments, it was a long journey to transform the form of payment, and now one more platform is prepared for modern users. It is about using a virtual currency that one can carry on his digital device. Hence one does not need to carry cash anywhere as the transaction with the help of virtual currency can be easily done. Among these virtual currencies, the Bitcoin is the most known one. There are also many more currencies in this market. Many people are not interested in cryptocurrencies only because they have a negative image in the market. Most people associate cryptocurrency transactions with tax evasion and money laundering activities. This is true to some extent, and hackers also demand ransom in cryptocurrencies to avoid detection by law enforcement agencies. This is also an excellent platform for fraudsters to run Ponzi schemes that attract a lot of novice investors.
Let us take a look at some of the most famous pyramids that cheated investors in the crypto world. They usually promise high returns or pay money for referring to other investors. While this goes on smoothly for a few years, it later takes an ugly turn, and most investors lose their money in such schemes. If you are not experienced in this market, you should always stay cautious and stay away from companies that promise high returns in a short duration of time. Those who are behind short term benefits can be duped by them.
This is by far the biggest cryptocurrency pyramid that ran for three years from 2014 till 2017. About three million people were victims of this fraud, and the total amount of investor wealth that was lost was around $5 billion. The modus operandi was simple, and every person received a reward for inviting a new investor. They made claims that the value of OneCoin will exceed that of Bitcoins in the near future. The interesting thing is that they did not even have a blockchain, and it was functional only on their pyramid sites. The Bulgarian government issued warnings about this, and the pyramid was forced to leave that country. Later on, many other countries banned the pyramid, and the promoters vanished into thin air after the ban.
The most interesting part about this pyramid is that it was developed by unknown developers and still managed to collect over 3.5 billion in two years. It promised a return of 40% per month, and investors can start with a minimum amount of $1000. When this drew the attention of the authorities across the world, the price fell nearly 90%, and the organizers were arrested for fraud.
This pyramid scheme was widely announced on the WeChat platform and promised to deliver returns of 10-30% per month. More than 4 million people became victims of this scheme, and the total amount of investor wealth lost was close to $3 billion.
Why do such companies thrive in the crypto world?
Such companies usually prefer the crypto market as investors are looking for new opportunities in this market. Apart from that, it can be easily floated online, unlike various other schemes, and this gives the fraudsters some sort of protection. In some cases, the real identity of the people behind such schemes is not known, and they get away with the crime without much punishment. The investors in this segment are also more adventurous compared to the regular investors in the stock market or commodity market. Considering all these reasons, this cryptocurrency market is an attractive place for such financial pyramids.