Bitcoin Ponzi Scheme Sparks Multiple Warnings to Investors


The U.S. government has come out and warned investors that Bitcoin may be used as a Ponzi scheme and is a dangerous form of currency in which to become involved. Earlier this month, the U.S. Securities and Exchange Commission issued a warning entitled Ponzi Schemes Using Virtual Currencies and specifically pointed out that Bitcoin is vulnerable to such schemes which are designed to scam people out of their money. One such scheme has already been revealed and some predict there could be many more to follow. Now, the Bitcoin Ponzi scheme is sparking multiple warnings to investors.

In addition to the U.S. government warning investors, several authors for large publications have come right out and stated that Bitcoin is, in and of itself, a Ponzi scheme. Large, reputable papers such as Forbes and Time have published articles on the SEC warning stating that investors should “beware” of getting involved with Bitcoin.

The SEC is not the only official government body warning investors about the potential for Bitcoin to be a Ponzi scheme; the North American Securities Administrators Association (NASAA) listed all digital currencies as one of the top ten threats to investors last year. The Financial Industry Regulatory Authority (FINRA) also issued its own warning, stating that :

Digital currency such as Bitcoin is not legal tender. No law requires companies or individuals to accept bitcoins as a form of payment. Instead, Bitcoin use is limited to businesses and individuals that are willing to accept bitcoins. If no one accepts bitcoins, bitcoins will become worthless.

Many of the warnings to investors on the dangers of Bitcoin center around the fact that it is not secured by any government or regulatory body and thus, there is no way to recover it if it stolen. It is also vulnerable to hackers and there is a danger of the Bitcoin “miner” losing everything with no way to recover it.

Many of the warnings also state that Bitcoin is often involved in illegal activities such as money laundering and other forms of fraud. Since it is not policed or governed by any regulating body, it is vulnerable to being used by criminals and terrorists, claims the U.S. government.

According to the SEC, some of the most dangerous warning signs to watch out for when thinking about getting involved with Bitcoin or any investment are:

-Large initial investment up front with the risk not adequately disclosed

-Secret strategies and/or structures of payments

-Sellers who are not licensed

-Invitation into the program by a friend or family member

-Returns that seem very consistent or promises of very high returns

-Payouts that are difficult to obtain

These and other warning signs can indicate that the investment is not legitimate. The U.S. government states that all consumers need to be aware of the risks involved with Bitcoin as well as other digital currencies because they are particularly vulnerable to being exploited by fraudsters.

Whether Bitcoin itself is a Ponzi scheme is the subject of intense debate between advocates of the system and the U.S. government as well as consumer watchdog organizations. However, as with any investment opportunity, say financial experts, it is best to thoroughly explore the facts before committing any amount of time or money to the program.

By: Rebecca Savastio


New York Post


United States Securities and Exchange Commission





5 Responses to "Bitcoin Ponzi Scheme Sparks Multiple Warnings to Investors"

  1. Greg Mathers   May 21, 2014 at 8:32 pm

    It seems to me that “Liberty Voice” is a Trojan Horse.

  2. Evander Smart   May 21, 2014 at 4:57 pm

    The world’s biggest “Ponzi scheme” the U.S. government doesn’t know anything about a decentralized monetary network. Anybody looking to get advice from any government agency is a fool. And a fool and his money are easily parted.

    Keep investing in the U.S. Dollar, the biggest 3-card monty game of all time. See where that gets you over the next 5 years. Between the QE3, the Russian, Chinese, and every other country in the world worth their salt RUNNING from the dollar, and the Fed being the only ones dumb enough to buy U.S. Debt., the dollar will go the way of the written letter and the carrier pigeon within 5 years.

  3. David Omahony   May 21, 2014 at 2:56 am

    Large initial investment up front with the risk not adequately disclosed

    Not true. Anyone can invest as much or as little as they wish

    -Secret strategies and/or structures of payments

    Everything is open

    -Sellers who are not licensed

    Licensed by who ? Governments

    -Invitation into the program by a friend or family member

    Again not true. Its not a pyramid scheme that needs exponential growth

    -Returns that seem very consistent or promises of very high returns

    No one promises anything

    -Payouts that are difficult to obtain


    In short your article is a cut and paste about all the bad mis-informed articles you could find. Do an article about fiat using the same method and you will find a lot more material.

    • Alex Strouss   May 21, 2014 at 6:22 am

      fiat for these people is a crappy Italian car company.

      but you’re right. using the same rhetoric on fiat/banks/fed and you’ve got a lot closer.

      no one knows how the fed operates. absolute lack of transparency.

      they promise you that insurances you HAVE to pay, or 401ks will pay out in the future, when it’s clear the whole system is bankrupt already today.

      so ridiculous

  4. Alex Strouss   May 20, 2014 at 7:12 pm

    bitcoins are actually legal tender in Germany.

    the US with its ridiculous spying laws on banks and regulations and a world reserve currency are the worst case for bitcoin.

    in many countries, the national currency is so much worse than bitcoin that it started to replace those in some cases already.

    the important thing to note is that bitcoin is not a currency. it is a protocol like http or email, on top of which there is a currency ‘app’ called bitcoin. bitcoin is actually multiple things.

    the good news is that because it is free, requires no registration or commitment, anyone can use it to receive money.

    bitcoin is a protocol, a set of rules. it is not a company. it has no financial interest. it is not a scheme of any kind.

    and every transaction ever made is available in clear text in its own architecture.

    bitcoin is the very essence of transparency.

    you are also your own bank with bitcoin. and it can replace the whole financial service industry. now. so it has a lot of enemies among the so called elites.

    and since it’s a real headache to understand, the media just calls it a ponzi scheme.

    but ponzi schemes are centralized and lack transparency.

    bitcoin is decentralized, asks for no investment at all in order to be part of it, and is utterly transparent.

    the SEC is ridiculously dishonest in their wording, or lacks even the most essential knowledge of how bitcoin works.

    calling bitcoin a ‘program’ implies centralization and financial interests. both of which is simply the opposite of what bitcoin represents.

    the biggest laugh is when they talk abut secret strategies and secret structures of payment.

    it is open source. EVERYONE can read the code. every transaction is right there in clear text. from 2009 to this very moment.

    the ‘strategy’ is, that whenever there is a crisis of money printing and inflation or bank failures, people run to safe havens. gold, silver or bitcoin.

    why bitcoin? cause it is decentralized and impervious to government seizure, borders, blockades, bail ins, and inflation.

    it is technically impossible, due to the math the protocol runs on, to increase the amount of bitcoins over 21 million.

    you can subdivide every bitcoin down to 8 decimals, 0.00000001, but you can never have more than 21 million in existence.

    the simple fact that it is inherently deflationary makes it a good bet for people who are mortally afraid of inflation.

    that’s the simple truth behind its insane rise in value.

    the other reason is that you pay a fraction of usual transaction fees (1 cent, if you want to) and transactions take minutes, not days, even across intercontinental borders.

    my twitter is @AskiTan
    I can write an article for you to explain it a lot cleaner and with sources, if you want

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