The US Gov’t vs. a 1.7 billion dollar Bitcoin pyramid scheme
If it walks like a duck and quacks like a duck, it's probably a $1.7 billion dollar pyramid scheme.
(We all know the saying).
The Commodity Futures Trading Commission (CFTC) has filed a case against 'MTI', a global multi-level marketing operation that took 29,421 BTC (~$1.7B) from 23,000 Americans.
The CFTC said it was “the largest fraudulent scheme involving bitcoin charged in any CFTC case.”
Here's how the grift worked:
New investors were offered 10% monthly returns (120% per year) on any Bitcoin invested into the fund.
E.g. $10K invested, would return an additional $12K per year.
If anyone questioned how the fund gave such high returns, MTI would cite their use of 'high-tech' trading algorithms.
As long as MTI could keep new customers coming in, they could afford to pay out the old ones (a classic Ponzi scheme).
To keep up the inflow of new customers, they would pay bonuses to any users that referred friends and family.
Here's what we're taking away from all of this:
Sure, Crypto.com may be doing ad spots with Matt Damon and Binance might be collaborating with Khaby Lame - but, globally, Web3 is still very much in its 'wild west phase'.
So while regulatory frameworks and government oversight aren't exactly sexy, they're still needed to stop bad actors like MTI.
