I am a big supporter of cryptocurrencies. I have even made a post on how to buy Bitcoin, click HERE if you haven’t read that yet. The sad thing is, however, that scammers have now moved on to using cryptocurrencies as a means to lure in victims to their Ponzi Schemes.
Earlier this week, I found an ad for a group named FIFFO. It was a cryptocurrency investment website that offered its members a get-rich-quick scheme in exchange for a membership fee. Here is a video of a member explaining it:
The business model he describes in the video is the classic structure of a Ponzi Scheme. The way Ponzi Schemes work is that they pay older investors with the money invested by newer investors. The classic argument by members of these groups is that “It’s not a scam! I earned money from it!” Yes, you can earn from Ponzi Schemes if you enter early. That “profit” you earned came from others’ money NOT from the Company’s profit. It means that once the Company decides to cash out or there are no more new investors, you will stop receiving money and the founders will disappear with all your investment. Also be aware that it is illegal to earn from a Ponzi Scheme whether or not you were aware of its nature. As Cited by this United States federal judge ruling:
Scholes v. Lehmann, 56 F.3d 750 (7th Cir. 1995), cert. denied, 116
S.Ct. 673 (1995):
“It is no answer that some or for that matter all of [defendant’s]
profit may have come from “legitimate” trades made by the
corporations. They were not legitimate. The money used for the trades
came from investors gulled by fraudulent representations. [Defendant]
was one of those investors, and it may seem “only fair” that he should
be entitled to the profits on trades made with his money. That would
be true as between him and [the principal or his corporations]. It is
not true as between him and either the creditors or the other
investors in the corporations. He should not be permitted to benefit
from a fraud at their expense merely because he was not himself to
blame for the fraud. All he is being asked to do is to return the net
profits of his investment – the difference between what he put in and
what he had at the end.”
Another unique feature of the FIFFO Ponzi Scheme is that they pay you with worthless F-Coins which they claim to be worth $0.10. I couldn’t find any F-Coins online other than the BTC faucet and this one HERE. And if it is that one, then its worth $0.0001. In other words, it’s worthless.
There have been so many exposed Ponzi schemes amassing millions from its victims over the past years, yet somehow people still fall for them. We should learn to stay away from these get-rich-quick schemes and start to improve our financial literacy. Invest in legitimate investment instruments like stocks, bonds, real estate and even legitimate cryptocurrency trading.