In addition to the obvious advantages in the form of anonymity, accessibility, ease of use and low cost of transactions, cryptocurrencies have some serious drawbacks that impede their global adoption. The main one is the connection between crypto and crime. Everyone who has studied this topic even superficially knows that Bitcoin (BTC) still remains a popular payment method among scammers and criminals on the darknet. Cryptocurrencies are very convenient tools for money laundering, evading taxes and cheating investors.
Today, I will talk about the most famous cryptocurrency pyramids, from which millions of investors suffered and whose activities amounted to billions of dollars in losses. These companies worked on Ponzi schemes, named after an Italian fraudster of the early 20th century. These pyramids do not produce goods and do not provide services — all they do is network marketing, where each member of the pyramid invites several new ones that invite the next ones and so on.
The only people involved who manage to earn in such a system are the organizers and some early investors who managed to withdraw their money in time. The remaining participants in the pyramid are left without money, with debts, or in the case of cryptocurrency pyramids, with no valuable tokens.
OneCoin is considered one of the largest cryptocurrency pyramids, which functioned from 2014 to 2017, deceiving about three million people and defrauding investors of around $5 billion in total. The founder of One Coin is the Bulgarian fraudster Ruzha Ignatova. The pyramid worked according to the classical Ponzi scheme, in which participants receive a reward for each new person invited.
The scammer convinced her audience that OneCoin would soon become the most influential cryptocurrency in the world. There were even promises to “kill Bitcoin.” It is worth noting that her coin did not even have its own blockchain and was accepted only on sites associated with the pyramid.
For the first time, the Bulgarian government spoke about the threat from fraudsters by publishing a message about the risks of participating in OneCoin, since the project is not a financial instrument and is not controlled by regulators. This caused the pyramid to “leave” the country and refuse to work with Bulgarian banks.
But soon, criticism and warnings about participating in the scheme came from the United Kingdom, Austria and Thailand. Italy and Germany even banned the activities of OneCoin in the countries and blocked their accounts. Ignatova simply did not attend the next announced meeting with investors in Lisbon, and was never seen again. There is no information on her whereabouts.
The United States government has charged Ruzha Ignatova with fraud and money laundering. While she faces 25 years of imprisonment, law enforcement officers still managed to arrest some of her accomplices, among whom include her lawyer, brother and former business partner.
Another major crypto pyramid…