Ponzi scheme

Tips And Tricks To Identify Cryptocurrency Ponzi Scheme

For most beginner traders, it’s difficult to identify the cryptocurrency Ponzi scheme. Sometimes, even frequent traders don’t recognize this scheme until they start losing money repeatedly. You won’t believe it, but this scam drained around $4.3 billion worth of digital currency in 2019. This scheme is still active in the market, trapping numerous traders. If you want to avoid losing your money in such schemes, you must know how to identify them. 

Below we have given the top 4 tips and tricks on how to identify a crypto Ponzi scheme.

#1 Investments With No Risk?- It’s A Red Flag

Every investment or scheme includes certain risks. A great investor once said that- “higher risks mean higher profits.” Suppose anyone in the crypto market promises you to provide high bitcoin investments at zero risks- they fraud. If you come across such a scheme that looks too nice to be true, never invest in it. It might be a bitcoin Ponzi scheme. There’s no chance that any bitcoin investment includes no risk. It’s a good sign to identify such frauds.

#2 Check If A Scheme Is Registered With SEC Or Not

Another simplest way to identify a cryptocurrency Ponzi scheme is with the help of the Securities and Exchange Commission or SEC. It is an independent government-regulated company that maintains fair and orderly functioning in the Crypto market. In other words, its job is to protect investors from scams and facilitate capital investment. It is necessary for any scheme and security to get registered by this agency to get sold further. Any type of scam isn’t registered with the Securities and Exchange Commission. And in the case of a Ponzi scheme, many traders ignore this point in the greed of high returns. 

How a Ponzi scheme works is very simple. In the starting period, you’ll keep on earning higher profits. But slowly and gradually, you will start experiencing losses. And till the scheme gets exposed, all your money gets flushed out. So before you invest in any scheme, make sure to check its registration with the SEC.

#3 Consistent Returns Is Never Possible

It is literally impossible to predict market ups and downs. That’s why ROI in the case of bitcoins is not uniform all the time. The prices of bitcoins can go up or down at any time. So if you find a scheme offering consistent returns- it’s isn’t worth the investment. Ignore them and find some genuine schemes where you can invest your funds.

#4 The Owner Looks Anonymous- The Scheme Isn’t For You

Suppose a broker is offering you a deal where you have to invest in their crypto scheme, and you’ll earn higher profits at lower risks. In such a situation, before you invest in their scheme, check the ownership status. Is the broker anonymous, or there’s no information about the company on their website? If yes, they might be a fraud selling you a crypto Ponzi scheme. 

Final Words

If you don’t want to lose your money in one of the most active crypto schemes of 2021, follow the above tips sincerely. These tips and tricks will help you identify which scheme is Ponzi and which one a safe investment.

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