$4.3 Bn in dollars due to cryptocurrency scams, Chainalysis study reveals

By Roberto D. | CryptoFarm | 31 Jan 2020

As the cryptographic industry grows, inevitably, scam attempts are multiplying which, as illustrated by Chainalysis in a report released recently, during 2019 have sent up the beauty of over 4.3 billion USD; the analysis company showed that most of the scams were connected to ponzi schemes, such as PlusToken and OneCoin.

The report highlights how the bulk of the figure that emerged from the analysis is attributable practically to two large ponzi schemes, without which the figure would have been much more modest; scammers, Chainalysis reports, take advantage of the hype generated by the cryptographic industry and the widespread belief, among those who approach these tools for the first time, that through cryptocurrencies you can get rich quickly and easily.

A belief, I add, that was also built thanks to the articles published by the mainstream media that while with one hand they continue to spread FUD as if there was no tomorrow, with the other they publish tons of clickbait articles in which they report stories (on the whose truthfulness I personally often have very strong doubts) of pre-adolescent boys who have become millionaires by investing a few tens of dollars in Dad's pocket money.

The report of the analysis company, however, is not as catastrophic as it might seem, the number of scams and the amount of money stolen from investors during 2019 was however less than 2018, so the feeling is that investors are becoming more wise.

Ponzi schemes, in their simplicity, are quite subtle scams because they offer huge and oversized returns for those who invest by convincing the victims to invest ever larger sums in the hope of making the hit of life; in reality these returns are paid simply by giving people back their own money.

In practice I promise a 5% return on a monthly basis and the investor, cautious in a first phase, entrusts me, for example, $ 1000 to see if I meet expectations; using those same $ 1000 the scammer can return $ 50 every month to the investor for a period of twenty months.

What happens is that long before the initial $ 1000 runs out, the scammer wins the investor's trust who begins to pay more and more money and spreads the word among his acquaintances; the volume of money, therefore, increases dramatically and exponentially, until the scammers disappear taking away the loot.

This scam, ingenious in its simplicity, was invented by an Italian (Carlo Ponzi) Born in Lugo, in the province of Ravenna, on March 3, 1882 and emigrated to the USA who in 1920 in just four months managed to go from a figure of just $ 5000 (still considerable for those years) at the astronomical figure of $ 420,000; since then the Ponzi scheme has become one of the most famous and used scams in the world, so much so that it still continues to claim victims despite being a widely known mechanism.