Too Good to be True Cryptocurrencies can be Well-Hidden Ponzi Schemes


Despite a sudden fall in prices of cryptocurrencies at the turn of the year, they still remain the flavor of the season in 2022. A reduction in the price of cryptos has motivated many individuals to purchase them with the hope of a rapid rise in their prices. But this line of thinking is not always correct and might entrap the investors into schemes that are too good to be true.

Be Cautious as History Might Repeat Itself

Many entrepreneurs often try to get rich quickly by creating complex schemes that are hard to decipher for naive individuals. One such example was seen last year when Satish Kumbhani created a scheme to mislead investors. Currently, he is on the run and US SEC is trying to figure out his location. Let’s have a look at how things unfolded.

The founder of BitConnect has disappeared into thin air after his cryptocurrency Ponzi scheme was exposed. The man in question is Satish Kumbhani who has been indicted by the US government and is set to spend 70 years in prison if he is found guilty.

Kumbhani is a 36 years old entrepreneur who was sued by US Securities and Exchange Commission (SEC) in September last year. The charges against Satish are that he accrued over $2 billion for his cryptocurrency platform BitConnect. However, the method that he used is considered fraudulent in nature by the SEC.

As per the documentation in court, Kumbhani was found misleading investors regarding the cryptocurrency lending program of BitConnect. Kumbhani told investors that he has created a proprietary tech for cryptocurrency trading, which he called Volatility Software and BitConnect Trading Bot. 

He promised tremendous returns to the investors and won their confidence. But abruptly shut down the company and fraudulently raised the price of a proprietary BitConnect coin called BCC. The list of charges against Kumbhani includes the operation of an unlicensed money transmitting business, wire fraud, conspiracy to commit commodity price manipulation, and international money laundering.


Cryptocurrency scams can be hard to figure out for laymen who don’t have a good grasp of technicalities. But if you can’t understand what a cryptocurrency company is doing, it is safe to stay away from it. Just like the BitConnect Ponzi scheme, there might be other scams running that you might not be able to understand at first sight. So, it is better to invest in proven cryptocurrencies if you don’t have the time to dissect and analyze a new cryptocurrency completely.

Also Read: 10 Cybersecurity threats to be prepared for in 2022

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