$1 Billion Crypto Ponzi Scam Revealed by Regulators


It’s been a tough six months for cryptocurrency investors. Whipsawing markets, shaky assets and economic pressures all combined to shock early markets.

The price of Bitcoin, the cryptocurrency’s best-known coin, has fallen since November and the currency touted as safe and secure because it is pegged to the dollar and monitored through exchanges has collapsed.

There were some high points.

Cryptocurrency evangelists are beginning to melt the way the market is regulated as international and domestic authorities take steps to understand and oversee the sector’s potential.

Russia’s unjust invasion of Ukraine also dampened momentum. A lot of people have been sending money in and out of Ukraine via crypto, which has proven once again how currency can be used in the end.

Despite these bright spots, the crypto sector is now at a crossroads.

It has lost more than half of its market value since November and is still ripe for fraud, schemes and a sudden plunge.

Now regulators are adding one more scam to that list.

$1B Ponzi Scheme Hits Crypto

The tax inspectorate revealed on May 13 that there was evidence of a $1 billion Ponzi scam centered on the cryptocurrency market.

U.S. tax officials said they were tracking 50 individual leads into fraud focused on things like non-fungible tokens and other decentralized segments of the sector.

“NFT is one of the new modern digital methods of trade-based money laundering,” said Niels Obbink of the Dutch Fiscal Information and Investigation Service at a press conference related to the IRS’ announcement.

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“And it deserves our attention because there is less control and oversight and limited regulation that makes it vulnerable to fraud when compared to the more well-known classic sector.”

Crypto’s ability to move across borders has made it a tool for scammers to target vulnerable groups of investors.

Additionally, as cryptocurrency scammers target larger and more abundant targets, this has led to numerous criminal acts by regulators to attack and control them.

“Some of these leads I’m talking about relate to individuals across our jurisdictions who have significant NFT transactions related to potential tax or other financial crimes,” Jim Lee, IRS’s head of criminal investigations, said at a press conference. Attend Bloomberg.

The funds involved appear to have affected investors around the world, including crypto buyers in the US, UK, Netherlands, Canada and Australia.

“[One] Looks like a billion dollar Ponzi scam. It’s a billion ‘B’ and this lead also affects every single J5 country,” said Lee.

J5 or Joint Director of Global Tax Enforcementis an initiative to combat tax crimes involving authorities in five countries.

Can regulators catch up to scammers?

One of the most common complaints about the crypto sector is that it lacks transparency, is not regulated, and is so opaque that investors have little place to turn if they lose money.

Lee said on May 13 that while it has traditionally been, the IRS is making cryptocurrency movement tracking one of its key priorities.

For now, the report can be made by investors who believe they may be victims of cryptocurrency scams. Here at the Federal Trade Commission.

They may also contact the Office of Investor Education and Advocacy via email. [email protected] or call 1 (800) 732-0330 or online form.

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