Daily fraud update: 3rd January

Chris Lee

Leading economist calls Bitcoin a “pyramid scheme”

A major economist has described Bitcoin as a “pyramid scheme” which causes a lot of problems.

In an interview with Yahoo Finance, Tendayi Kapfidze – who serves as chief economist at the firm Lending Tree – said that there was no “real utility” to the cryptocurrency, which is by far the world’s most well-known.

“It’s a pyramid scheme. You only make money based on people who enter after you”, he said.

“It has no real utility in the world. They’ve been trying to create a utility for it for ten years now. It’s a solution in search of a problem and it still hasn’t found a problem to solve”, he added.

However, he is far from the first economist to say similar.

Paul Krugman, who is one of the most prominent economists in the world, two years ago described the surge of interest in Bitcoin as “natural Ponzi” – although he did point out some key differences.

“The point is that even though bubbles are, in effect, natural Ponzi phenomena, they don’t end as cleanly and suddenly as deliberate Ponzi schemes”, he was quoted as saying.

Crypto firm in Missouri given “cease and desist” order

A cryptocurrency firm in the US state of Missouri has been told that it must stop certain activities which are considered to be contributing to misleading of investors.

Mavixbtc, which works out of St Louis in Missouri, has been told by the Securities Division that it must stop performing activities which appear to mislead investors after it allegedly lied about where and with whom it was registered.

The alleged scam firm supposedly claimed it was registered alongside the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation.

It allegedly used registration numbers which belong to other organisations as part of its attempts to appear legitimate.

However, it has now been told it must stop carrying out these activities – which it has supposedly been doing for months.

According to press reports, the firm also made grand promises to its investors – one of which related to the amount of returns on offer.

It is understood to have promised returns as high as 55% over the course of just six days in some cases.

Now, the firm has suffered the loss of its web presence after the host of the domain name behind the site had to take the Mavixbtc site down.

In a final blow, the firm has been told that it will face a penalty.

This is believed to amount to more than $30,000, as it also includes the costs incurred in carrying out the investigation.

In a statement, the Securities Commission David M. Minnick warned traders not to “be fooled” by the promises of those offering high returns.

“Scam artists commonly use professional looking websites to promise immense investment returns, but don’t be fooled. If something sounds too good to be true, it probably is”, he said.

Chris Lee

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