$1 billion Crypto Ponzi Scheme Revealed in a Crypto Fraud Investigation 

May 15, 2022

Reading Time: 2 minutes

The daily rise in crypto popularity has energized scammers around the world to take advantage of digital currencies, thereby posing more risks to investors’ assets.

However, tax investigators on May 13 have said that they have information on $1 billion Ponzi schemes centred around cryptocurrency markets.

According to the American tax officials, 50 separate leads into scams were being followed, most of which were focused on scams on nonfungible tokens and other decentralized parts of the sector.

“NFTs are one of the new modern digital ways of trade-based money laundering,” said Niels Obbink of the Dutch Fiscal Information and Investigation Service at a news conference involving the Internal Revenue Service’s announcement.

He furthered that:

“And since there is, comparing with more well-known classic sectors, less control and less supervision and a limited regulation that makes it vulnerable for fraud, it must have our attention.”

Crypto’s movement across borders undetected has made it a mechanism for scammers to easily target vulnerable investors in digital assets. This reason has also sharply increased the number of defrauders, of which regulators are moving to attack and restrain their attempts.

“Some of these leads I’m talking about, they involve individuals with significant NFT transactions revolving around potential tax or other financial crimes throughout our jurisdictions,” Jim Lee, the IRS’s chief of criminal investigations, said at a news conference.

The money involved appears to have affected investors across the globe, comprising cryptocurrency buyers in countries like Australia, the UK, Canada, and the United States.

“[One] appears to be a $1 billion Ponzi scheme. That’s billion with a ‘B’ and this lead also touches every single J5 country,” Lee said.

Will Regulators be Able to Keep up with scammers?

One of the leading criticisms against digital currencies is the lack of transparency; if an investor loses money, for instance, such an investor has little recourse.

Lee said on Friday that while that has always been the case, the IRS is making the tracing of the crypto movement one of its topmost priorities.

Furthermore, investors who think they might at any point in time be a victim of a crypto scam can fill out a report at the Federal Trade Commission here or contact the Office of Investor Education and Advocacy via email at Help@SEC.gov or by phone at 1 (800) 732-0330; they can also report through an online form.

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