Ponzi Schemes In Crypto: What Happened With BitConnect & OneCoin?

The investment landscape is full of opportunities; some will pay out and some won’t. While there are plenty of legitimate projects, whenever there is money to be made there will be people looking to cash in on at the other people’s expense. This is especially true in new and emerging industries, and the cryptosphere is no exception.

There have been several scam coins and Ponzi schemes in the short history of cryptocurrencies. This is due to a number of factors. First and foremost is the lack of governmental oversight. In traditional investment opportunities, there are regulatory bodies created to identify and deal with malicious actors looking to cash in and take advantage of uninformed investors. The Securities and Exchange Commission serves this purpose in the United States.

The lack of any government body ensuring accountability in the cryptosphere means that all responsibility is on the investor to properly investigate new projects in order to judge if they are above board. This has led to several high profile cases of crypto Ponzi schemes that have defrauded scores of investors for millions upon millions of dollars. We will examine a couple of the more infamous projects in this paper, but first, let’s look at a few early warning signs for scam coins that could potentially save a naive investor from having the wool pulled over their eyes.