The cryptocurrency scam continues to roil the world of digital currency assets, luring unsuspecting investors with promises of incredible returns. The year 2022 saw a significant rise in the prevalence of these fraudulent schemes, with $7.8 billion paid into cryptocurrency pyramid schemes and Ponzi schemes globally, a report by blockchain intelligence firm TRM Labs reveals.
Among these deceptive practices, Ponzi schemes have emerged as a particularly destructive form of cryptocurrency scam, wreaking havoc on individuals and the broader financial ecosystem.
Despite the sharp drop in cryptocurrency prices during the ongoing bear market, it is clear that cryptocurrency-related crime has not seen a relative decline.
Famous players in the crypto scam scene
in 2022Two prominent crypto Ponzi schemes, Forsage and Trade Coin Club, have come under legal scrutiny for their fraudulent activities. Forsage has attracted investors by offering them great returns with Ethereum contracts and BNB Smart Chain. This scheme operates through two related entities, and has managed to raise approximately $974 million from unsuspecting individuals.
On the other hand, Trade Coin Club has attracted more than 100,000 investors by promising lucrative profits through cryptocurrency exchanges. However, the scheme collapsed after raising more than $295 million. In response to their deceptive practices, the Forsage Club and Trade Coins faced sanctions from the US Securities and Exchange Commission.
Bitcoin halfway to the $31K level. Chart: TradingView.com
Researchers investigating pyramid schemes and cryptocurrency in North America TRM lab report I discovered that 10 of the largest schemes account for about 54% of the total amount involved in such fraudulent activities.
In addition, it was revealed that a significant portion of investment fraud schemes in 2022 targeted the Tron blockchain, with 40% of the total incoming investment volume being attributed to this platform.
This increase in fraudulent activities on Tron has mostly been facilitated by Tether (USDT), a stablecoin issued on the blockchain. In comparison, in 2021, Tron’s participation in investment fraud schemes was only 17% of the total volume.
Crypto Scam: The Allure of Quick Wealth and FOMO
Despite repeated warnings and increasing awareness of the risks associated with crypto Ponzi schemes, people continue to fall victim to these fraudulent schemes.
Crypto Ponzi schemes They often promise extraordinary profits within a short period, taking advantage of people’s desires to make big gains in the volatile cryptocurrency market. The fear of missing out (FOMO) on these potential profits leads individuals to invest without thorough research or due diligence.
Additionally, the complex and technical nature of cryptocurrencies can be intimidating to many people. Crypto scammers exploit and exploit this lack of understanding by presenting their schemes as innovative investment opportunities that are only accessible to a few.
They create an illusion of exclusivity, making potential victims believe they are part of an exclusive group of early adopters who stand to reap huge rewards.
Experts warn that it is essential for individuals to educate themselves about the risks involved in cryptocurrency scam, remain skeptical of unrealistic promises, and seek advice from reputable sources before investing their hard-earned money in any cryptocurrency project.
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