Recently we’ve posted some information about Bitcoin on TCIH. This information is intended to be an objective view of the current situation for investors, interested readers, and potential skeptics.
Yesterday, I got a call from someone wanting to share his excitement about the new financial opportunity that had dropped into his lap. He had recently attended a conference in Texas and had returned with increased enthusiasm. That glee was the motivation for his call to me. Of course the topic was Bitcoin and he was eager to add me to his upline. Yup, probably one of the newest 21st century spins on the infamous pyramid schemes and multi-level marketing scams of the last century. They purport to be “creating life-changing income with an innovative bitcoin return on capital platform that is disrupting the crypto markets”.
So I dutifully clicked in the link of the website he directed me to. Sign-up was easy and I received the customary confirmation email message but – for some mysterious reason, my hosting company had tagged the message as SPAM. Now why, I asked myself, would a reputable company sign-up confirmation be tagged as SPAM? This referral was from someone I knew after all.
So I did some due diligence and discovered that the company he was now heavily involved with has a jaded past. The scheme uses crypto trading robots that automatically trade the various crypto currencies made available by the brokers on the robots such as BTC, ETH, LTC etc. They offer an opportunity to make very good profits off of these existing trading products. This is a similar concept to that used in Forex trading, where traders are able to code various messages (e.g. on the MT4 Platform), in such a way that even when they are not around, the MT4 system picks trades based on those rules and executes accordingly.
Suggested qualifying tests an investor might use BEFORE deciding to be involved might be:
- High investment returns with little or no risk. Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. Be highly suspicious of any “guaranteed” investment opportunity.
- Overly consistent returns. Investment values tend to go up and down over time, especially those offering potentially high returns. Be suspect of an investment that continues to generate regular, positive returns regardless of overall market conditions.
- Unregistered investments. Ponzi schemes typically involve investments that have not been registered with the SEC or with state regulators. Registration is important because it provides investors with access to key information about the company’s management, products, services, and finances.
- Unlicensed sellers. Federal and state securities laws require investment professionals and their firms to be licensed or registered. Most Ponzi schemes involve unlicensed individuals or unregistered firms.
- Secretive and/or complex strategies. Avoiding investments you do not understand, or for which you cannot get complete information, is a good rule of thumb.
- Issues with paperwork. Do not accept excuses regarding why you cannot review information about an investment in writing. Also, account statement errors and inconsistencies may be signs that funds are not being invested as promised.
- Difficulty receiving payments. Be suspicious if you do not receive a payment or have difficulty cashing out your investment. Keep in mind that Ponzi scheme promoters routinely encourage participants to “roll over” investments and sometimes promise returns offering even higher returns on the amount rolled over. – Source sec.gov
The object lesson for today is probably be cautious about anything that looks like a pyramid scheme or which “promises” guaranteed returns or quick profits. And the lesson is even more poignant at a time in history when facts are obfuscated and news is twisted into unsubstantiated innuendo and suspicion.
The beat goes on . . .
Thanks to my wife for her skepticism