A scam worth billions of dollars. The most famous crypto pyramids.

[Teacher]

Some well-known cryptocurrency pyramids were able to deceive investors for billions of dollars. These companies operated Ponzi schemes named after an early 20th-century Italian fraudster. These pyramids do not produce goods or provide services - all they do is network marketing, where each member of the pyramid invites a few new ones, who invite the next ones, and so on.

The only people who manage to make money in such a system are the organizers and some early investors who managed to withdraw their money on time. The rest of the pyramid participants are left without money, with debts or, in the case of cryptocurrency pyramids, without "valuable tokens".

OneCoin

OneCoin is considered one of the largest cryptocurrency pyramids, which operated from 2014 to 2017, defrauding about three million people for a total of about $ 5 billion. The founder of One Coin is Bulgarian fraudster Ruja Ignatova. The pyramid worked according to the classic Ponzi scheme, in which participants receive a reward for each new person invited.

The scam artist convinced her audience that OneCoin will soon become the most influential cryptocurrency in the world. There were even promises to "kill bitcoin". It is worth noting that its coin did not even have its own blockchain and was accepted only on sites related to the pyramid.

The Bulgarian government for the first time announced the threat from scammers, 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 forced the pyramid to "leave" the country and refuse to work with Bulgarian banks.

But soon criticism and warnings about participation in the scheme came from the UK, Austria and Thailand. Italy and Germany even banned OneCoin's activities in these countries and blocked their accounts. Ignatova simply did not show up for the next announced meeting with investors in Lisbon, and no one else saw her. There is no information about her whereabouts.

The US government accused Ruja Ignatova of fraud and money laundering. She faces 25 years in prison, but law enforcement officials have only managed to arrest some of her accomplices, including her lawyer, brother and former business partner.

BitConnect

Another major cryptopyramid operated from 2016 to 2018: BitConnect. It was created by unknown developers led by a man named Satao Nakamoto.

Participants had to buy BCC tokens on a special platform, and the trading bot had to automatically make a profit. Members of the pyramid were promised 40% profit per month. According to the organizers of BitConnect, from the initial investment of $ 1,000, investors could expect to withdraw $ 50 million in three years.

The first critic of the pyramid scheme was Vitaly Buterin, who drew attention to the fact that the promise of 1% profit per day is a classic Ponzi scheme. After some time, Mike Novogratz and Litecoin (LTC) creator Charlie Lee agreed with the opinion of the founder of Ethereum. At the same time, questions to the organizers of BitConnect came from the government of the United Kingdom, which demanded that the company disclose its business model. However, this did not stop scammers from participating in crypto events and attracting new investors.

The US authorities helped end this story by calling BitConnect a financial pyramid scheme and demanding to stop its activities. After that, the BCC token fell by 90%, investors were left with a total loss of $ 3.5 billion, and one of the organizers of the pyramid was behind bars. However, Diwash Darhi, the head of BitConnect's Indian branch, was released on bail in 2019.

PlusToken

The youngest and largest financial pyramid scheme in recent years. Founded in 2018, the pyramid scheme was advertised on China's WeChat with promises of a 10-30% return on investment per month. About four million people have become members of the PlusToken scheme. The scammers allegedly advocated financial literacy and trained people to use cryptocurrencies, but in reality they were trying to convert them into Plus tokens.

At the same time, justice still caught up with the organizers of the scheme, and a year ago six of them were arrested at the request of the Chinese authorities. However, the $ 3 billion lost by investors will not be returned. Most recently, on June 22, all EOS were withdrawn from the pyramid's wallets.