Common Crypto Scams: Ponzi Schemes & Impersonation

What you'll learn

• The Scope of the Problem in 2024
• BitConnect: A 2.4 Billion Dollar Ponzi Scheme
• OneCoin: 4 Billion Dollars and No Blockchain
• PlusToken: When Law Enforcement Caught Up
• Impersonation: The July 2020 Twitter Hack
• A Mental Model for Spotting Ponzi and Impersonation Scams

Key terms

Ponzi scheme

A fraudulent investment operation that pays returns to existing investors using new investor deposits rather than legitimate profits. BitConnect raised approximately 2.4 billion dollars before collapsing in January 2018.

Pyramid scheme

A fraud where participants earn primarily by recruiting new participants, with each level paying commissions to those above. OneCoin used this structure to raise over 4 billion dollars.

BitConnect (BCC)

A 2016-2018 lending Ponzi promising up to 1 percent daily returns. Closed January 16, 2018 with a 92 percent crash. Founder Satish Kumbhani indicted February 2022; remains a fugitive.

OneCoin

A 4-billion-dollar fake cryptocurrency that never had a real blockchain. Founder Ruja Ignatova was added to the FBI Top Ten Most Wanted on June 30, 2022; reward raised to 5 million dollars in June 2024.

PlusToken

A 2.25-2.9 billion dollar wallet-app Ponzi (2018-2019) primarily targeting China and South Korea. Authorities seized approximately 194,775 BTC and sentenced operators to 2-11 years in November 2020.

IC3 (Internet Crime Complaint Center)

The FBI portal for reporting online financial fraud at ic3.gov. The 2024 IC3 report logged 9.32 billion dollars in crypto-related losses across 149,686 complaints.

Bitcoin ATM fraud

A scam where victims are coached to deposit cash at a Bitcoin ATM and send the resulting BTC to a scammer-controlled wallet. The FTC reported 65 million dollars in losses in just the first half of 2024.

ICO touting

Paid celebrity promotion of token sales without disclosure of compensation, illegal under U.S. securities law. The SEC reached its first such settlements with Floyd Mayweather and DJ Khaled on November 29, 2018.

EthereumMax (EMAX)

A token promoted by Kim Kardashian on Instagram in 2021. The SEC settled with her on October 3, 2022 for 1.26 million dollars and a three-year promotion ban.