Contrary to what many New Yorkers might believe, Ponzi schemes can involve more than inexperienced investors and greedy schemers. Many of these cases are complex and easily overlooked; what can seem a wise financial step can become a disaster overnight. More recently, a different angle of this crime has reached the spotlight: that of cryptocurrencies.
Last September, Market Insider focused on a case in which a New York man faced accusations of operating a bitcoin Ponzi scheme. Nicholas Gelfman, Brooklyn resident and head trader, allegedly solicited $600,000 from 80 different clients -- which, according to Market Insider, involved false strategies and reports. Gelfman purportedly "staged" a hack in attempts to cover up the scheme. Such cases are not isolated, either; Market Insider points out that this form of Ponzi scheme is a popular strategy of the Italian mafia to launder money. Others have extorted large amounts of cryptocurrency from malware victims.
Inc. Magazine also weighs in on the fraudulent cryptocurrency schemes that have taken the market by storm. My Big Coin was under recent investigation from the U.S. Commodity Futures Trading Commission, who found the company guilty of false claims regarding cryptocurrency trading, fake prices listed on their website, payouts paid to customers by other customers and a list of other charges. The owners of My Big Coin had allegedly used the money toward a new home, antiques and luxury goods. According to Inc., warnings from numerous agencies about the riskiness in trading cryptocurrencies are concerned primarily with their status as cash markets (which are not regulated by the government), potentially big swings in value, users' ability to manipulate markets and inadequate security. With cryptocurrencies a prominent focus into today's economy, Inc. also warns that governments have begun to put a few under radar.