Many cryptocurrency owners are forgetting the primary advantages of using digital money for their transactions, which is that of circumventing the red tapes and charges imposed by traditional financial institutions.
Recently though, not a few have been lured into investing their virtual money into Ponzi-schemes and other similar investment scams using the blockchain technology.
Enticed by the prospect of amassing cryptocurrency without having to mine or earn them as profits in conventional trade transactions, victims easily forget that fraudulent investment schemes can easily circumvent an unregulated financial system.
Ponzi-schemes are the most viable because scammers need only to promise cryptocurrency owners profitable returns. Over time, millions of cryptocurrency owners were lured into becoming members by using the Plus Token app, which they were led to believe as legitimate e wallets.
Unknowingly, Plus Token was also transferring small amounts of digital money to e wallets created for purposes of laundering the money collected from members.
Although Plus Token members may have seen increases in their e-wallet balances, there was no guarantee that such increases were real or had been entered in the blockchain system.
In a real-money Ponzi scheme, profits given to subscribers do not come from real investments, but are only skimmed from contributions of new members. In the blockchain platform, this can be verified only by those who are savvy enough to decrypt the blockchain transactions entered by Plus Token.
How the Plus Token Ponzi Scheme was Unraveled
.Legitimate blockchain-based ewallet operators have actually given warnings about the incredulity of the idea of paying out profits just for using a blockchain-based ewallet.
Still, the number of Plus Token memberships reached 10 million in July 2019, which was the same time that Dovey Wan, founder of a legitimate cryptocurrency investment firm called Primitive Ventures, took notice that Plus Token was gradually but continuously selling off cryptocurrencies in small batches.
Ms. Wan immediately tweeted warnings about the Plus Token activities, whilst urging cryptocurrency exchange operators to blacklist the site. She also furnished them with ewallet addresses that appeared to have been beneficiaries of the cryptocurrency sell-offs.
After the alarms were raised and reached proper authorities, six Chinese nationals identified as members of the core team running the Plus Token Ponzi-scheme, were located in the island country of Vanuatu. The South Pacific island country later extradited the six to mainland China.
Token Analyst, a crypto-analytic firm located in London said Plus Token maintained e wallets that they used in laundering money once online mixing services have fused the Plus Token-held cryptocurrencies with other e wallets. That way, details of where the virtual money originated will become obscure.
Online mixing services are actually offering this type of work, which in an unregulated system of financial operation, can do so freely without fear of sanctions.
Other Methods Used by Scammers in Luring Investors to Ponzi Schemes
A promise of profit and fast-talking swindlers are not as effective in order to entice millions of cryptocurrency owners in a short span of time. Other methods are in use in order to make the Ponzi-scheme look truly legitimate;
Use of forum influencers, who take part in the website’s forum to attest to how their digital money has grown since becoming a member.
Paying recruiters, who also influence potential investors by showing off their newfound wealth at social media sites; when actually, the money they earned were commissions earned for every new member they recruited.
In today’s high tech advancements, there are now sophisticated software that can interact with Telegram, an Internet-based messaging system popular among cryptocurrency users. Tech savvy scammers find legitimate methods of responding to inquiries about ewallet account balances. That way, the lured investor will read what he or she is hoping for: the money promised already appears in one’s account.