Summary
This article explains what a pyramid scheme (or Ponzi fraud) is and how it relates to cryptocurrency. We explain how to recognize a pyramid scheme, how to protect yourself, and what to do if you’ve become a victim.
What is a pyramid scheme?
A pyramid scheme is a fraudulent investment model where money is earned by recruiting new participants rather than selling real products or services. The profits of earlier participants are paid with the money from new investors. Eventually, the system collapses when there are not enough new participants.
How do pyramid schemes work with crypto?
Pyramid schemes have also entered the crypto market. Often, new coins or tokens are offered where you are rewarded for referring new participants. It’s usually not about a real product or useful technology, but purely about bringing in money.
Signs to watch out for:
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High promised returns with no risk
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Rewards for recruiting new members
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Lack of clarity about the project or team
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Pressure to invest quickly ("get in now before it’s too late")
How do you recognize a pyramid scheme?
Watch out for these signs:
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Focus on recruiting new participants
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No transparent information on how returns are generated
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Mandatory entry fees or purchases
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No or unclear licenses or oversight
What should you do if you’ve become a victim?
If you’ve invested in a pyramid scheme, it’s important to act quickly:
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Stop investing immediately
Do not make any more payments, even if they claim it’s needed to recover your previous investments. -
Secure your digital assets
Try to withdraw your crypto immediately to a trusted wallet, such as your own Bitvavo wallet. -
Collect and save evidence
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Emails
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Payment proofs
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Contracts
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Chats and message history
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Screenshots of websites
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Report your situation to Bitvavo
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Send an email to fraud@bitvavo.com
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Include "Urgent" in the subject line.
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Attach your collected evidence.
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File a report with the police
Use all your collected documentation. State that it involves potential investment fraud. -
Report the situation to official authorities
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Authority for the Financial Markets (AFM) – for reporting investment fraud.
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Fraudehelpdesk.nl – for advice on your next steps.
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Warn others
Inform your network so others don’t fall into the same trap.
Frequently asked questions (FAQ)
How do I know if a crypto offer is a pyramid scheme?
Check whether there is a real product or service, ask about licenses, and be extra cautious if the focus is on recruiting new members rather than the product itself.
What should I do if I was scammed by a pyramid scheme?
Stop investing immediately, secure your crypto, collect evidence, report the case to fraud@bitvavo.com, file a police report, and notify the AFM and Fraudehelpdesk.nl.
Can Bitvavo help if I’ve become a victim?
Bitvavo can investigate reports and advise you on next steps. Unfortunately, we cannot recover lost funds from external parties, but we’re happy to support you where possible.