Ponzi schemes and multi level marketing (MLM)

Digital currencies, such as Bitcoin, have recently become popular and are intended to serve as a type of money. However, the rising use of digital currencies in the global marketplace may entice fraudsters to lure investors into Ponzi and other schemes in which these currencies are used to facilitate fraudulent, or simply fabricated, investments or transactions.

Common Red Flags of Fraud

Many Ponzi schemes share common characteristics. Following are some red flags:

  1. High investment returns with little or no risk
    Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. “Guaranteed” investment returns or promises of high returns for little risk should be viewed skeptically.
  2. Overly consistent returns
    Investments tend to go up and down over time, especially those seeking high returns. Be suspect of an investment that generates consistent returns regardless of overall market conditions.
  3. Unregistered investments
    Ponzi schemes typically involve investments that have not been registered with the required supervisor or regulators.
  4. Secretive and/or complex strategies and fee structures
    It is a good rule of thumb to avoid investments you don’t understand or for which you can’t get complete information.
  5. Issues with paperwork
    Be skeptical of excuses regarding why you can’t review information about the investment in writing. Always read and carefully consider an investment’s prospectus or disclosure statement before investing. Be on the lookout for (spelling) errors in account statements which may be a sign of fraudulent activity.
  6. Difficulty receiving payments
    Be suspicious if you don’t receive a payment or have difficulty cashing out your investment. Ponzi scheme organizers often encourage participants to “roll over” promised payments by offering higher investment returns.
  7. It comes through someone with a shared affinity
    Fraudsters often exploit the trust derived from being members of a group that shares an affinity, such as a national, ethnic or religious affiliation. sometimes, respected leaders or prominent members may be enlisted, knowingly or unknowingly, to spread the word about the “investment”.
    More information can be found here.
Where can I go for help?

If you have a question or concern about an investment, or you think you have encountered fraud, please recover your digital currencies as soon as possible and contact the Bitvavo support team by sending an email to support@bitvavo.com with the subject "Urgent" so we can take action together as soon is possible to limit potential damages.


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