In addition to the obvious advantages of anonymity, access, ease of use and low transaction costs, cryptomonies have some serious drawbacks that prevent their adoption worldwide. The main one is the connection between cryptomoney and crime. Everyone who has studied this topic, even superficially, knows that Bitcoin (BTC) remains a popular payment method among fraudsters and criminals in the Darknet. Krypton currencies are very convenient tools for money laundering, tax evasion and investor fraud.
Today I will talk about the most famous crypto currency pyramids, from those whose millions of investors suffered to those whose activities resulted in billions of dollars in losses. These companies worked on Ponzi schemes, named after an early 20th century Italian con man. These pyramids do not produce goods or provide services, all they do is network marketing, where each member of the pyramid invites several new ones who invite the next ones and so on.
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The only people involved who manage to earn in this system are the organizers and some of the first investors who manage to withdraw their money in time. The rest of the participants in the pyramid are left without money, with debts, or in the case of the crypto-currency pyramids, without valuable tokens.
OneCoin is considered to be one of the largest crypto-currency pyramids, operating between 2014 and 2017, fooling some three million people and defrauding investors out of a total of some $5 billion. The founder of One Coin is Bulgarian con artist Ruzha Ignatova. The pyramid operated according to the classic Ponzi scheme, in which participants receive a reward for each new guest.
The con artist convinced her audience that OneCoin would soon become the most influential cryptomoney in the world. There were even promises to „kill Bitcoin“. It should be noted that her coin did not even have its own blockchain and was only accepted on sites associated with the pyramid.
For the first time, the Bulgarian government talked about the threat of fraudsters by publishing a message about the risks of participating in OneCoin, since the project was not a financial instrument and was not controlled by the regulators. This caused the pyramid to „go out“ of the country and refuse to work with the Bulgarian banks.
Later, criticism and warnings about participation in the plan came from the United Kingdom, Austria and Thailand. Italy and Germany went so far as to ban OneCoin’s activities in those countries and block its accounts. Ignatova simply did not attend the next announced meeting with investors in Lisbon, and was never seen again. There is no information about her whereabouts.
The United States government has accused Bitcoin Era of fraud and money laundering. Although she faces 25 years in prison, law enforcement officials have managed to arrest some of her accomplices, including her lawyer, her brother and her former business partner.