In 2019 alone, more than $4 billion worth of digital currencies were scammed. That is 3 times more than it was recorded in 2018. With the global COVID-19 pandemic causing uncertainties in economies, this figure is expected to go up in 2020 for sure.
The ideal world for scammers
When it comes to money and its markets, scammers are bound to exist. What makes cryptocurrencies so enticing for scammers is based on 2 factors:
- Greed – The desire to make as much money as possible with the least possible effort. This is the factor that is so often used to entice users and investors to part with their money.
- Knowledge – A lot of people are still unfamiliar with how cryptocurrency works. All they know is that there is good potential in it and if they own it, they could make some money.
That said, the 2 issues would have users falling prey to the many schemes, more notably ponzi ones which have been rampantly operating in recent years.
Ponzi and other scams
There are several different types of scams when it comes to cryptocurrencies (and surely other money markets). Blackmail scams, fake services and dubious token sales are among them. Ponzis however has been one of the more significant and affected ones. To date, millions of users across the world have reportedly suffered losses due to these schemes in one way or another especially when they are difficult to track on digital platforms.
Ponzi schemes involving cryptos work where people invest in an enterprise where profits are given to the early investors before they close shop. Accounting to more than 90% of the fraud reported, one of the big cases that took place is the PlusToken in China. It reportedly involved some $2 billion in funds where it provided digital wallet services. It used a token (fake) called Plus which convinced over 3 million people to invest. Reports stated that more than $185 million worth of stolen Bitcoin has been cashed out. This is just one of the many schemes that are circling around the market and if not curbed and monitored will see more people losing their money to such unscrupulous scams.