FTC Shuts Down Cryptocurrency Pyramid Scammers

The Bitcoin nail has some people forgetting the quondam adage "if information technology sounds likewise good to be true, it probably is," and scammers are cashing in on that naiveté for their own gain.

The Federal Trade Commission on Friday announced it has close downwards the operations of 4 individuals who allegedly ran get-rich-quick cryptocurrency schemes, promising victims large returns in substitution for a small payment of Bitcoin or Litecoin.

Three of the defendants – Thomas Dluca, Louis Gatto, and Eric Pinkston – allegedly operated pyramid schemes known equally Bitcoin Funding Team and My7Network. Through their websites, YouTube videos, social media accounts, and briefing calls, the trio allegedly claimed they could turn the equivalent of around $100 into $fourscore,000 in a calendar month, the FTC said.

To enroll in the plan, victims were required to make an initial Bitcoin payment. From there, they were encouraged to start generating acquirement by recruiting new participants and convincing them to pay the entry fee. Instead of raking in the Bitcoin like they hoped, nearly participants weren't fifty-fifty able to recoup their initial investment, the FTC said.

"This case shows that scammers e'er find new ways to market old schemes," Tom Pahl, acting director of the FTC's Consumer Protection Bureau, said in a statement.

A quaternary defendant, Scott Chandler, promoted Bitcoin Funding Team and another cryptocurrency pyramid scheme known every bit Jetcoin. During promotional calls, Chandler allegedly claimed Jetcoin participants could "double their investment in 50 days" through Bitcoin trading.

"In reality… the scheme failed to deliver on these claims and ceased performance inside 2 months of launching," the FTC said.

The defendants violated the law "by misrepresenting the chain referral schemes as bona fide money-making opportunities and by falsely claiming that participants could earn substantial income by participating," the FTC said. At the agency'southward request, a federal court has issued a temporary restraining order and frozen the defendants' avails.

Virtually Angela Moscaritolo

Angela Moscaritolo

Angela Moscaritolo is PCMag'south expert on fettle and smart home products. Teaching yoga for nearly x years has helped her in evaluating a range of connected health products including fitness trackers, heart rate monitors, rowers, smart scales, stationary bikes, strength training machines, treadmills, and more. Angela also tests smart home devices from her ranch in Florida, including air purifiers, kitchen appliances, and robot vacuums, just to proper noun a few.