How Not to Become Victim of Bitcoin Ponzi Scheme

How Not to Become Victim of Bitcoin Ponzi Scheme

by April 17, 2018

Bitcoin is real, while Ponzi scheme is fake. The former is an existing digital currency, while the latter phrase means a fraudulent investment activity that got its name from Charles Ponzi, an infamous swindler in the 20th century.

The recent arrest of the Ordonio couple in the Philippines who allegedly amassed nearly P1 billion ($19 million) from over 100 people, promising them easy money through Bitcoin investment, is a classic description of a Ponzi scheme ― a get-rich-quick bogus investment deal.

To shed light on the issues and share helpful information, Fintechnews Philippines interviewed Miguel Cuneta, a co-founder of Satoshi Citadel Industries (SCI). His company is licensed by the Banko Sentral ng Pilipinas (BSP) to conduct virtual currency (VC) exchange in the country.

No Get-Rich-Quick

Cuneta said the best way to avoid Bitcoin Ponzi scams is really to just understand that Bitcoin is not a get-rich-quick scheme.

Miguel Cuneta

Miguel Cuneta

“If someone is promising impossible returns, if it seems too good to be true, it usually is. The BSP (central bank) has issued advisories on this. Also, SCI has published a few articles,”

Cuneta said in an interview with Fintechnews Philippines.

Based on SCI’s latest message about Bitcoin Ponzi schemes, it explained the method is done the classic fraudulent way ― pyramiding scam. The company noted a low initial investment can be multiplied by signing up additional members using referral links.

Before long, hundreds of victims have joined the scheme. At a later point in time, the original scammer walks away and the pyramid collapses.

Cuneta in his previous blog argued that people who join Ponzi schemes are quite aware of the risks.

“Some even willingly participate knowing it is a scam, with the hope that they can earn a little more money before they exit at the expense of a greater, more desperate fool. It’s sad, but it is true.”

SCI’s other tips vs. Bitcoin Ponzi schemes

Don’t trust anyone claiming they will give you or help you mine bitcoin, and avoid social media invites to join these money-making ventures. There is no such thing as guaranteed returns on cryptocurrencies.

ponzi scheme-bitcoin

Image via Pixabay

When dealing with seemingly legitimate companies online, check if they are real registered companies. Better yet, ask to see their office or meet them in person.

Be vigilant when engaging with the social media accounts of legitimate bitcoin brokers or trading platforms, as they are frequently victims of convincing impersonations as well.

Never engage in any financial transaction, bitcoin or otherwise, via direct message on social networks. These scammers use social media to reach tens of thousands of people and eventually will find someone to victimize.

When in doubt, call the BSP Consumer protection hotline. The BSP now regulates Bitcoin companies and they will be able to tell you if you are dealing with a licensed or at least legitimate company.

To learn on how to open a Bitcoin wallet, tap or click here


Photo on top shows nabbed Ordonio couple, Arnel and Leonady. Image from Philstar Global.