Recent reports by the FCA and SEC are shedding light about what’s becoming a growing epidemic which seems like its only getting worst. The growing popularity and massive media interest it has generated in creating a new generating of online fraud rings which promote various lifestyle scams. Aggressive marketing tactics include images reminiscent of lifestyles of the rich and famous and exorbitant sums of money which can only be described as unbelievable.
Why Is This Happening?
Various stories about the Winklevoss Twins and Vitalik Buterin have created such massive media hype that anyone reading about this new trend is automatically attracted to it. Unfortunately, there are too many uneducated people who are looking to get rich quick but don’t really take the time to evaluate their surroundings and fail to realize they are being led awry and manipulated by very sophisticated conmen.
Confusion and Disinformation
As the massive media frenzy continues, we see a barrage of news articles about how Bitcoin is performing today, a new ICO, a Fork, or a new Blockchain technology which enables better encryption. Makes sense? Well, depending on who you are at times the deluge of information which is thrown in your direction can be processed up to a certain degree of accuracy. In fact, many people don’t really understand basic concepts such as FIAT currencies or what Ponzi Schemes are. In reality, there are Wallets used for depositing and cashing out, exchanges for trading, and mining rigs for mining. The rest is basically divided into the technology, actual trading, and investment aspects.
Bitcoin and other virtual currencies such as Ethereum, Litecoin, Ripple, or Dash are gaining more popularity. People want to trade! However, they are afraid to do it by themselves or are unsure of their ability to be successful traders. That is when various systems come in and try to assist, and while some are legit, others like Bitcoin Trader and Profit Wizard Pro are fraudulent software and are devised in order to generate profit for the promoters behind the scheme and not for the actual traders.
How Crypto Scams Work
There are various types, some are Ponzi Schemes which rely on a broad base of traders and pay them from their initial investment. Eventually new customers stop joining and the scheme fizzles out. After that we have HYIP’s which are high yield investment schemes. These operate in a similar way, but usually shut down much faster. Then we have affiliate scams and that is when online promoters refer customers and get a percentage of the profit they generate for the broker.
The Future of Crypto Scams
As with everything else eventually the regulatory bodies will catch up with the crooks and ban this type of illegal activity. But until then, much money will change hands and many victims will lose their houses and pension money as con artists are becoming more cunning and aggressive in their baiting tactics.