Scam

Understanding Scams

Scams associated with cryptocurrencies have experienced a significant increase and have become a preferred strategy for scammers to deceive investors in the cryptocurrency market.

Cryptocurrency scams can appear in various forms, including blackmail, fraudulent investment schemes, and deceptive business opportunities. Over time, Ponzi schemes and fake initial coin offerings have also become widespread.

Fraudsters often use tactics like sending text messages or emails to users, pressuring them to make payments using Bitcoin.

Ponzi schemes, which involve BTC and other virtual currencies, are a specific type of investment scam. In these schemes, existing investors receive payouts from funds collected from new investors.

A notable case, SEC v Shavers, revolved around the promotion of an alleged Ponzi scheme that falsely promised investors weekly returns of up to 7%. The scheme also claimed that the funds would be used to purchase more BTC.

In 2019, a single Ponzi scheme involving BTC and Ethereum generated an estimated $2 billion, according to Chainalysis.