Top Ten CryptoScams Exposed: Empowr Marketplace, BitConnect, and USI Tech

Top Ten CryptoScams Exposed: Empowr Marketplace, BitConnect, and USI Tech

By bettercallpaul | Better Call Paul | 27 Feb 2020


Top Ten CryptoScams Exposed (1-3) Empowr, BitConnect, and USI Tech(Updated)

An Almost-Weekly Newsletter Featuring a Spotlight on Past, Current, and Suspected Top Ten Cryptocurrency and Blockchain-based Scams

by

W. Paul Alexander 

for The

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Blog on Publish0X


 

 

#1:  USI Tech (2017)

This Week's Spotlight will focus on USI Tech Limited (USI Tech), a Major Scam that Stole Millions from Users

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PONZI?  Absolutely! 

First and Foremost, I would like to thank my readers and followers, the number of which has drastically increased following the publishing of some of my recent CryptoScam expose.  You all have given me the motivation to continue my research to provide a very valuable service to those who have been taken advantage of as well as those who are about to invest with a bad actor.  

I have interacted with dozens of my readers regarding their suggestions for my next scam alert post.  By far, the overwhelming suggestion was that I expose USI Tech.  

What was USI Tech? 

According to Wikipedia, USI Tech was a "Dubai-based cryptocurrency and forex platform trading provider, suspected to be a high-yield investment program and a Ponzi scheme."

As with most HYIPs, USI Tech promised returns that are unheard of, and quite frankly, unbelievable to those who perform their due diligence before investing (something that each and every one of us should do). 

As with many scams, those behind USI Tech took great care to distort and disguise ownership of the company, and to this day, the actual ownership has not been established, although it is suspected.   

USI Tech was initially promoted by a core group that included Lee Oakey, Kerry Stockton, Rodney Burton, and Michael Faust.  Oakey and Stockton are British expats living in Australia.  Rodney Burton is the infamous "Bitcoin Rodney" that famously purchased a Lamborghini with bitcoin, leading to the "lambo" memes that have since arisen.  He is a convicted felon and has served time in prison for drug dealing-related offenses.  

So, as far as my due diligence strategy goes -- if I were a potential USI investor, the people promoting the scheme would have been a major red flag to me and would've been an absolute dealbreaker.  The rule of thumb is...if the people who started the company are bad actors, then everything produced by the company will also be tainted.  This is very similar to the "fruit of the poisonous tree" concept in the legal system, which hold that if the police act in bad faith (illegal search warrant, for example), then everything that comes as a result of that bad action is inadmissible at trial.  As a paralegal myself, I extend said concept when determining what to invest in -- especially with the flood of scams that will always be a part of any unregulated industry.  

Why USI Tech was a Scam

One of USI's initial promoters was a man named Dan Putnam, who identifies as the CEO of R&D Global.  R&D Global is one of the companies that Engadget suggests could be a potential parent of USI Tech.  He was often seen boasting as to how a small, under $100 investment was guaranteed to make newcomers into crypto-millionaires.  The year was 2017 and we were in the middle of the ICO bubble.  New crypto-millionaires were being minted everyday, but at the same time, scammers were draining the life savings of those who thought that they had stumbled into the one opportunity that they had been waiting on their entire lives.  Fortunes were made but lives were destroyed.  The cryptosphere was essentially unregulated, so scams abounded.  

Enter USI.  USI pulled a similar approach to another well-known cryptoscam, BitConnect.  If you'd like know more about BitConnect and how it's Ponzi system operated, see my other post, "Naming Names," found here.  BitConnect and USI actually both crumbled in very similar manners, too -- after the Texas authoriies issued emergency orders shutting them down. 

Once those behind USI realized that the game was over, they did what all scam HYIPs and Ponzis have done in the crypto-world.  They vanished with user's deposited funds and disappeared into the night. 

In fact, the Texas authorities have went on the record stating that those behind USI Tech were able to extract hundreds of millions of dollars from all over the world from their users.  

The Big Lie -- What USI Promised to its Investors

USI sold users "packages" that were promoted as having a guaranteed 140% return on investment (ROI) over the course of 140 days.  The packages could be "bought" for around $50 USD (50 euros, actually), and then they gave users the classic, textbook Ponzi false claim that "the more [they] bought, the higher return they would receive.  Of course, this is never true, except for a very few lucky people who joined the scam early, as the early sign ups were paid their "returns" out of the revenue generated by new user sign ups.  Again, this is another textbook Ponzi move.  They build up their early targets' confidence, getting them to invest larger amounts based on the "legitimacy" demonstrated by them paying out these users' returns.  The only people who made it out without being scammed were those who said "no" to reinvesting their earnings and got the hell out of there.  

Eventually, people who joined later stopped getting paid, and basically the later you joined, the less chance you had of receiving a dime back from them.  This, again, is how ALL Ponzi schemes work. 

For example, the US Social Security system, which is the largest Ponzi scheme on earth, uses money that people are taxed in the present to pay those who are currently retired.  Many people think that, when they pay Soc. Sec. taxes, that those are applied to their own personal SS accounts, and that those funds are what they receive in retirement.  Of course, this is not so.  Current SS taxes go to pay the people currently receiving benefit -- in other words, the "early members" of the scheme. 

The promise of the system is that by doing this, those paying taxes today are guaranteed that they will receive SS benefits in their retirement age.  Unfortunately, we've all heard the studies which indicate that The SS Trust Fund will be insolvent in less than 20 years.  That is the critical point that the largest Ponzi on earth will fall in on itself, with those who paid into the system the most recent being left out in the cold. 

Because the Social Security system has this imminent point in every Ponzi scheme where the current can no longer pay the obligations made in the past, it is a true Ponzi, as opposed to MLM schemes, some of which are Ponzi's and some are not.  

USI Tech is a TRUE Ponzi scheme.  True Ponzi schemes always fail.  

Thus, every claim made by those promoting USI Tech were all a part of "The Big Lie," and even those that innocently shared their referral codes in a way to grow their earnings contributed to the harm that was done to those who lost.  The differentiation comes upon determining who contributed to the scheme intentionally and/or knowingly, as such is the standard of culpability in most criminal offenses that they are likely guilty of. 

What Happened Next? 

After it was made clear that USI Tech was over, those behind it tried to launch the same scam.  First, they attempted to pass one off as a crypto exchange called Eyeline Trading, followed by another HYIP/fake exchange known as "Wealthboss."  These have both been identified and exposed as scams, and currently, it is unknown if users will ever be able to obtain a judgment against those who ran USI, as the identities are unknown.  The only recourse would be if the SEC were to freeze and and all assets with any relation to USI in the United States and then provide partial refunds to those who lost money based on the amount there were able to recover from the sale of any seized assets.  

This would be the legal process to address the scam -- it's the same policy used for those who scam millions via infomercial scams, so it would only make sense that this would happen.  

However, it is unclear if this will ever happen.  

Those who were victims should contact an attorney that handles tort litigation to inquire about the possibility of bringing a large, public class action suit against those responsible (as well as "Doe" defendants -- those who are not known at the time of filing but that evidence proves the inclusion of them in the scheme).  Alternatives include attempting to pursue criminal litigation as well as individual civil suits.  

Current Legal History Brought Against USI Tech (List from Wikipedia)

  • On 20 December 2017, the Texas State Securities Board issued an emergency cease and desist order as neither USI-Tech nor the sales agents, Clifford Thomas and Michael Rivera, were registered to sell securities in Texas.
  • On 21 December 2017, the Government of New Brunswick issued a consumer alert against investing at USI-Tech, and advised consumers to contact the Commission if approached about investing in the company.
  • On 12 January 2018, the Attorney General of Guam issued a statement advising people to exercise caution when investing at USI Tech.[12]
  • On 26 January 2018, the Government of Saskatchewan issued a Cease Trade Order, and requested anyone contacted by USI-TECH to inform the Financial and Consumer Affairs Authority of Saskatchewan. 
  • On 9 April 2018, the Spanish financial regulator Comisión Nacional del Mercado de Valores added USI-Tech to its warning list of unauthorised firms and entities.
  • On 16 August 2018, the Financial Markets Authority of New Zealand updated its warning list to include USI Tech on basis that it is offering financial services and products to residents of New Zealand without authorization, while also warning that the operators have the characteristics of a scam.

Other Speculation into USI Tech

Many cryptosphere personalities have dove deep into USI to try and find out those who are ultimately responsible.  Here is some of the evidence that has been gathered to demonstrate the pattern of overt acts of fraudulent activities, thus qualifying for prosecution in the United States under the RICO Act.  

One bloggers writes: 

"What we do know is that Joao Severino and Ralf Gold founded the project. Before starting USI Tech, Severino was banned from all financial activity in Portugal because of his involvement with another scam company called AMC Invest. Even worse, Ralph Gold had been involved in all sort of Ponzi scheme companies. These included AdsProfitReward, MX Fast Money, World Consumer Alliance, HourlyRevShare, AdsProfitWiz, APR Clicks, and Upper Game."  

The company also claimed to be based in Dubai. However, the registration of the business is actually from Ras al Khaimah, another city in the United Arab Emirates that is well known for its offshore business registration services.

Other sources place the company as being Dubai based, so it's not certain if these know for certain or are just repeating what they heard elsewhere.  

Final Thoughts

I realize that pointing out the obvious signs that this was a scam is a statement that must be made with care.  It is important not to make people feel unintelligent/stupid/ignorant for not seeing these signs and being taken by a scam.  It's so easy to sit in judgment after all is said and done and exposed, looking through the 20/20 lenses upon events that have already happened.  It's not so easy to recognize these types of scams if you a). believe that the world is kind and good, by nature or b).  have never been exposed to a scam before.  People in this boat are victims, and while crypto is a "play at your own risk" world, it's not right to criticize those who have been wronged or taken advantage of.  

Thus, the case of USI Tech brings me to the final conclusion that my mission in exposing cryptoscams is a much-needed service, more now than ever.  

I hope those of you who fell victim to USI Tech were able to recover all of your funds, but I know that's not the case, so I hope you were at least able to put your hands on some restitution.  

 

#2:  BitConnect

**** Published Originally on Publish0x on Jan 11, 2020 by WPA for the Better Call Paul Blog and reproduced by the author to raise extra awareness of projects that have no shame when it comes to taking advantage of their trusting members.  


Hello faithful readers, and welcome to the Better Call Paul series on cryptocurrency scams.  Last week, we covered the "Empowr" network, a hybrid Ponzi type of scam that was finally outed when they flooded their economy with a huge supply of coins over what they claimed the max supply would be, effectively sending the coin into hyperinflation not seem since Weimar Germany. 

This week, we will be covering one of the original crypto scams, and to this date, probably one of the most successful in terms of what they were able to steal from their customers.  Of course, the scam I refer to is none other than.....BitConnect.  

So, BitConnect was a platform with its own coin (BCC).  The company allowed users to deposit funds and convert them to BCC, which could then be lended through their network for a pretty decent return.  

I have to admit that I fell victim to this scam personally, but the good thing was, I only lost money that I had previously gained from trading, so the loss didn't impact me that much -- I just hated to see it crash and burn.  

The BitConnect coin was also highly ranked and consistently held a high value, consistently being well above $500.00 on the exchanges.  It seemed like a project that was going to make it big.  

The problem was that the project had no way of sustaining itself, and the developers knew this -- leading to a situation that resembled classic Ponzi schemes to where those who entered late in the game lost their entire investments. 

State bureaucrats in Texas started to see red flags around the project, and issued a letter telling the company to cease all operations in Texas.  When this was made public, confidence in the project dropped.  The lending platform was suspended for users, and the developers made an announcement that they would be refunding all money to all users, but they would be doing so with the BCC coin, which was rapidly losing value.  

For instance, when they paid me out, my BCC went from being worth about $500 to just under $40 within a 45 minute period.  

Then, this happened: 

In a menacing turn of events yesterday, Bitcoin investment lending platform BitConnect abruptly announced it is shutting down its lending and exchange services. But while this sudden “curveball” might have come as a massive surprise for thousands of gullible investors, the writing was on the wall all along.

...and that was that.  BitConnect shut down and kept all of our money.  

So what can we learn here to prevent us "gullible investors" from investing in another scam project?  

First of all, all of us who invested in BCC were not "gullible."  The scam was very well created and everything about it seemed legit.  The BCC asset was holding its value, so BitConnect seemed a great place to invest.  However, because it was new, I decided I would only invest gains from other investments, that way if I lost it all, I wouldn't actually be losing anything.  Unfortunately, there were some folks who lost their entire cryptocurrency holdings to BitConnect. 

Steps to Prevent Being a Victim

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1.  Never invest more than you are able and willing to lose.  This is the most important concept when it comes to investing in blockchain products.  If you use what you gained from other investments, then you never go against your own bottom line, and if you gain on top of that, you now have two layers of protection against your bottom line. 

2.  Do your Due Diligence.  Always research the platform you are about to invest in.  Look at market performance and value of the asset, of course; but you also need to investigate the project itself, not just its performance on the markets.  Are the developers active?  When was the last update to the project?  Does the project have a roadmap?  Are the developers meeting the goals on the roadmap?  Are there are posts or articles written about the project, etc.   

These are the questions that you should seek answers to before you invest.  

3.  Never listen to anyone promoting a project in a chat box.  On the exchanges, you will consistently see people who are attempting to manipulate that markets.  They will start saying things like "Buy BCC!  It's going to the moon."  These people are the reason that "pump and dump" exists.  Avoid these people and the projects they promote like the plague.  

4.  Start small.  This goes along with the first tip of only investing what you can afford to lose, but it is a bit different.  When investing in a new project, start small, play the market, and see if you are able to generate a profit, and then use that profit to try to generate more of a profit.  

If you follow these tips, you should be able to steer clear of these types of scams.  

BitConnect is considered by many to be one of the largest scams in the cryptosphere today because of the methods with which they were able to maintain the market value of their coin -- so those who got in early and sold when the value was up actually made money, while those who got in late quite frankly had the potential to lost everything, and many did.  

So, that's the expose on BitConnect.  Many of you are already aware of the BCC scam, but a CryptoScam blog series wouldn't be complete without mentioning the granddaddy of 'em all!  

Until next week....

Deo Volente,

 

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for the Better Call Paul blog. 

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Remember -- if your rights are ever trampled and/or you find yourself facing legal action or become the victim of a scam -- Lawyer Up!  Always seek legal advice to determine your best steps goes forward related to both prosecution of the scammer as well as restitution to you and other victims. 

#3:  Empower Marketplace

**** Published Originally on Publish0x on Jan 11, 2020 by WPA and reproduced by the author to raise extra awareness of projects that have no shame when it comes to taking advantage of their trusting members.  


Thank you for reading.  Scams in society in general have a tremendous effect on economies worldwide.   After witnessing some of the blatant fraud that goes on in any unregulated industry, specifically these "better-than-good" crypto projects that promise untold wealth for little to no effort whatsoever.  While there are literally billions -- even trillions -- of US Dollar-equivalent riches to be gained by players in the cryptosphere; 99% of these yet-to-be-awarded riches only come to those who have worked hard to establish themselves in the world of blockchain who have put in countless hours to bring their projects to fruition.  

Now, it is certainly possible for someone to make a large return off of a very, very small initial investment through the crypto-trading world -- as a matter of fact, I've done it.  However, while it appeared as though the small investment was the only thing the made my large return come true, the truth of the matter was that I was able to take my compensation for working on the founding of the Rupee Blockchain project and trade it during the ICO bubble of 2017 and made a total return of $750,000 USD off of a zero-dollar investment (not including my labor working on the project, which probably accountED for about 20,000 USD.  

 This is RARE.  Any time you see a project promising extremely high yield like this (They call these HYIPs, or "high-yield investment platforms"), do intense and copious research on your own before you EVER invest in one of these.  Before you give your money to any project like this, ensure that you are able to connect with a REAL user on the platform that has received their promised returns.  If you cannot verify by reaching out to users of the platform, run away.  If it seems too good to be true, run away.  

I have thus decided to start a weekly article in which I explain some of the active cryptoscams out there and expose them for the liars and cheats that they are.  

This week, I will be explaining the scam that calls itself "Empowr".  

What is Empowr?

Empowr is supposed to be a "democratically" run social media network where members, who Empowr calls "citizens," are able to post items for sale, trade, barter, and even make a solid passive income simply by posting well put-together content.  Most people active on the site speak in broken English and they almost never give relevant feedback to anything.  From the very get-go, something felt fishy about it.  I had never even heard of the project before, until one day in late 2017, I received a telephone call...

It was about a year and a half ago, and my 69-year-old mother who had been using a PC at that for about 6 months, gives me a call and tells me that she has found a source of online income for herself, and she wanted me to take a look at to see if it sounded legit.  I have been a freelance paralegal, content creator, and successful entrepreneur; so I have become the "it person" to come to in both my neighborhood and within my own family for anyone considering making the leap from employee to business owner.  Anyway, I immediately was able to ascertain that the Empowr project was a scam.  They told her that she had made $17,000, and she was so excited.  She just needed a Paypal account in order to withdraw her funds and she was good to go.  Except, no payment ever came.  

Come to find out, she had been spending close to 30 hours a week -- the threshold that separates part-time from full-time for sake of health-care coverage in the United States -- for the previous 3-4 months, writing voluminous, thoughtful, and flat-out excellent posts on the Empowr platform day-in, day-out.  Her stats on the homepage eventually said that she had earned over 30,000 USD.  At this point, I told her straight up that it was a scam and to leave it alone, but she had invested a ton of work and put her soul into the content she was posting.  I told her to put it out there to the "community" and make a post flat out asking if anyone had ever received their money from Empowr.  She never found anyone who gave an answer to the questions, but soon after, Empowr announces that, instead of the 32,000 USD she had in her account, they were switching over to paying contributors in their new, shiny ERC-20 token.  

Well, this would have been fine, had they been given the choice to do so.  However, that 32,000 USD that my mother was told she had already made should have never had anything to do with the Empowr crypto.  It was earned long before the Empowr token came into existence, and as such, should have been paid out using Paypal via a USD transaction the way that it was promised in the beginning.  

Then, after the people behind Empowr had their pump-n-dump ICO, the token saw a very slight increase in price.  However, in order to withdraw the token, you had to send ETH to cover "transaction fees" akin to Eth gas price, but much more than the actual gas price cost itself.  So, my mom finally got out before she gave them any of her hard-earned retirement funds, thankfully, because she could not figure out MetaMask.  

The Saga Continues and the Fraud is Uncovered 

So, as you can imagine, people started to get very pissed off.  During the ICO, the creators of the project made a promise to the community that there would never be more than 10 billion Empowr tokens created.  However, not long after that, they decided to break that promise and flooded the platform with billions upon billions of tokens.

...and what happens when a centralized issuing authority starts increasing the monetary supply in any given economy?  It doesn't matter if it's 1920's Weimar Germany or 2020's blockchain economies -- when the money supply is arbitrarily increased by someone controlling the levers, hyperinflation is the result.  This is exactly what happened with Empowr.  

To give you an idea of how bad it had become -- during the time that my mom was involved with them, I created an account in order to check out the site and evaluate it for credibility.  One log in, no activities, no pages viewed, no connections made.  Yet, regardless of this, each morning I receive an email from Empowr telling me that I have in excess of 18 million of their coins.  Of course, I cannot access them, and when you try to go to Empowr's homepage, you are greeted with a message telling you that the previous iteration, which they call an "Open Alpha Test" was being completely shut down in order to "make room for the Beta phase."  

Anyone who knows anything about software development understands that the process from alpha to beta to release is a cumulative process.  The alpha version does not get completely scrapped to make way for the beta version.  Sure, some features may not make it past Alpha to Beta and then to retail, but I have been in this industry a long time, and this just screams to be that they are about to disappear with everyone's money..  

I don't even think those 18 million tokens would go as far as buying a McDouble from the McDonald                                  's value menu, much like the hyperinflation in Germany in the 1920s that saw people carrying wheelbarrows full of cash to buy a loaf of bread.  

Now, if you try to access their homepage from any browser that has the Metamask extension installed, you will see the following warning and feedback from Etherscamdb.info -- which is a database that houses current information regarding suspected crypto scams.  As you can see, the behavior that qualifies them as a scam is the fact that they literally require users to turn over their private keys, after which there are so, so many instances of complaints from their user base that describe a fraudulent company that debits the tokens held in the wallet for which the private keys were turned over. 

It's bank fraud, plain and simple -- because even though the scammers behind Empowr may think that they are free and clear of bank fraud because there are no banks involved in the Empowr scam itself, they fail to realize that when they withdraw those fraudulently gained funds to their own fiat accounts, THAT is where the crime occurs.  Add to that wire fraud, using a computer system to perpetrate fraud, etc., etc., etc., just like every other financial racketeering.  


From https://etherscamdb.info/domain/www.empowr.com

URLhttp://empowr.com
Category: Phishing - Empowr
Description: Asking for private keys that are sent to the backend with POST /FBBank/EthereumWalletEditor.aspx - deposit address (to buy their coins) 0x50fe59792a325084604a524a8f148de04182769a
Status: Active
IP185.203.72.17

MetaMask Status: Not Yet Blocked
Google Safe Browsing Status: Not Blocked Yet 
VirusTotal Detections: Could not pull data from VirusTotal
Phishtank Detected: Could not pull data from Phishtank
Urlscan Scan ResultsLink

Nameservers:

pdns03.domaincontrol.com pdns04.domaincontrol.com                                                                                                                                                                                       

Conclusion

Empowr is a scam, through and through.  It has been exposed as such by many people who have fallen prey to their straight up criminal enterprise, and since I actually have a personal history with these people, I thought it would be a good idea to discuss them this week.  The concept was actually decent, and some of the ideas put forth by Empowr are being used in new, legitimate projects, such as the Sapien Network.  However, in the end, the people behind Empowr were nothing more than criminals, and by exploiting the buzz around the cryptocurrency world during the ICO bubble, were able to make millions for themselves by promising desperate people who cannot work for a living a chance to put together legitimate passive income.  Instead, they are preyed upon by these vultures and are left with nothing but a massive loss.  

If you've been dedicating time to crafting top-notch content to post onto Empowr, just walk away right now.  Take the loss as it relates to the time you spent, but make a log of that time spent putting in hours and hours creating content for the Empowr scheme.  The more people that come forward about this, the more likely it becomes that governmental agencies will step in and seize the site and shut down, while on the other hand, a nice attorney comes to the picnic and represents all of those who lost due to Empowr's scheming.  

The only thing that is not good going forward is that they are not US-Based.  If they were, the feds would've already put an end to this while our FTC would be taking the reins to get victims reimbursed for their losses.  

There are some people that still defend Empowr as though they are making what they are being promised.  I have a challenge to you all -- just show us all proof that you have received a legitimate payout from them, and I may be interested in taking another look -- but until someone demonstrates proof that the payments have occurred, Empowr will stay on my "scam" list. 

 

How to Stay Safe in a World of Fraud and Scams

To those who do not yet follow this blog, a couple of weeks ago, I decided to write a series of articles involving Cryptocurrency/Blockchain scams that have, at times, rocked the crypto world quite a bit.  It is important to note that when I mentioned "scams," I am being all-inclusive of projects that ended up taking investor money and keeping it for themselves without doing what was promised to the investors.  By this definition, business failures like Mt Gox meet the criteria for inclusion, and very well may be included as a way to study the past to fix the future.  

This post, however, is a supplement to my normal postings in which I expose the scams for what they are.  Last week, I exposed the HUGE scam known as the Empowr Community.  It has become a very popular posting, and as a result, I would like to share it with any new readers to my blog.  You can access the Empowr expose by clicking here.

 

|.  What is a Ponzi Scheme? 

Many people mistakenly classify any "multi-level marketing" structured company/program as a "Ponzi Scheme."  The term has become basically a catch-all for fraudulent scams, but the truth of the matter is that Ponzi schemes have specific criteria that differentiates them from other schemes.  It is important to understand a Ponzi scheme and how to identify one, thus the motivation behind this posting. 

This gleaming difference that gives Ponzi schemes their own category is that, in order to be a Ponzi scheme, the structure of the company must be such that it makes it's profit from newcomers paying their initial dues.  In fact, in order to be a Ponzi scheme, the amount of revenue coming from new sign-ups will always exceed the revenue coming from the company's supposed flagship service or product.  

Ponzi schemes can be very simple or they can be massively complex and complicated.  They can be designed to scheme a few thousand dollars or over a billion, in cases like Bernie Madoff's.  

To understand it better, let's take a look at this simple, simple example below of a common single-party E-Bay Ponzi Scheme: 

1.  The scammer (we'll call him "Seller") makes an eBay account and buys 10-20 small items in order to establish a bit of positive feedback. 

2.  Seller opens an Ebay seller account. 

3.  Seller places high-dollar items on sale, staggering the start date of the listing to where there is a 2-day gap between them.  

4.  Seller repeats this process about 4-5 days later. 

5.  As the first customers start to inquire about where their items are, Seller apologizes and blames "the mail," and then uses the latest payment to refund the earliest customer.  

6.  These people all leave positive feedback (or no feedback at all). 

7.  Rinse and repeat.  

Finally, this will keep occurring until system of refunds and new listings can no longer sustain itself.  Once it looks like things are about to go bad or an account is about to be limited, Seller will make one last push selling high-dollar, non-existent items and will then disappear.  

The saddest thing about Ponzi schemes is that, more often than not, unless the value lost is in excess of $100,000, the federal government may not pursue charges -- even if they know who did it and can prove their case beyond a reasonable doubt!  

Of course, as law enforcement agencies see budget increases during good economic times, this threshold will lower. 

 

|.  What is a pyramid scheme/multi-level marketing scheme and are they always scams? 

Many people confuse Ponzi schemes and multi-level marketing schemes as though they are one-in-the-same.  They are not, but there is one rule of thumb to remember: 

1.  All Ponzi schemes are MLMs but not all MLMs are Ponzi schemes.  

The MLM structure resembles a pyramid -- with the newest and lowest-ranking members as the bottom and the most senior or most valuable person is at the top.  Because each level you rise in the organization is prohibitive by nature, there are less people on each new level -- making the structure of the business take on the aforementioned pyramidal shape.  

All Ponzi schemes that involve more than one person will have an MLM/pyramid structure, where the money from the newest go to finance the income of those on top.  

However, this is not mutually exclusive.  An MLM structure does not always mean that a company is a Ponzi Scheme, and there is nothing inherent to the MLM structure that even makes it wrong, immoral, or illegal.  In fact, some very good projects and products come from MLM-structured businesses.  

For example:  

1.  AVON - This mainstay of the health and beauty field has independent distributors and is structured like an MLM.  

2.  CryptoTab browser -- this new and innovative browser pays its affiliates via an MLM structure with 10 levels of income out.  It is not at all a Ponzi scheme -- it is completely legitimate and has faithfully paid out every request I have made.  In fact, even though I try to shy away from MLMs for the most part, I have been pleasantly surprised by #CryptoTab, to the point that I advocate everyone getting in while they still can -- why not get a free $40-50 per month in BTC for doing absolutely nothing?  

Get your piece of the CryptoTab pie today:  https://inorangepie.biz/10093214?l=55.  If you use this link to download it, I will make about $2.00 -- Full disclosure. 

Read my prior article giving users an update on my CryptoTab earnings to demonstrate that it really pays:  Better Call Paul Blog - CryptoTab Update.

3.  Other companies include Mary Kay Cosmetics and Kirby Vacuum Systems -- they all pay their "distributors" or "contractors" according to a multi-level approach where each level higher gets a higher commission level then the one previous. 

The thing about MLMs that most people fail to understand because of the incorrect belief that all MLMs are Ponzi schemes is that MLMs are not always fraudulent -- no more so than any other style of business.  Of course, there are ways to exploit the MLM/Pyramid structure to take advantage of those below you to enrich yourself unjustly, but if the company allows such exploitation, they are no longer a "reputable" organization. 

Conclusion

As we move through and dive deep into my upcoming CryptoScams expose projects, it is going to become very important that my readers fully understand the difference between the many different types of scams that exist out there.  These supplemental articles will cover everything from the topic included herein to other common scams, such as money transfer/employment scams, Nigerian Prince scams, and many others.  

Today, you should have learned the definitions of both a Ponzi Scheme and and MLM-structures business, as well as the differences between both of these.  You should understand now that every Ponzi scheme is a scam but not every MLM business is.  Furthermore, even though every Ponzi scheme has the pyramidal structure of an MLM; not all MLMs are Ponzi schemes.  

That just about wraps it up for now, guys!  

Until next time... 

 

 

Thanks for reading, 

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Writing for 

The

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BLOG

 

 

....well, that's all I have for today. 

I wish you all the best blockchain experience possible!  Such experience does not come by chance, but by design...keep yourself safe and invest wisely, always doing your own research!  


bettercallpaul
bettercallpaul

Winner of the Publish0x 100K writing contest, I am a seasoned freelance creative writer with over a decade of writing and journalism experience. I love to write, cook, and learn new things. I look forward to contributing relevant content.


Better Call Paul
Better Call Paul

A multi-topic blog focusing on legal and technology topics. All published content is intellectual property and copyright protected under federal laws. Copyright is held by the author, W. Paul Alexander.

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