01 Cryptocurrency Encounters Upward and Downward Pressure
Recently, the police in a northern province in China cracked down on an organization involved in cryptocurrency-related pyramid schemes. Due to the fact that there were clients who came to consult with the Mann Group, the team is quite familiar with the details of the case. The model of this case has some aspects that are worth the attention of the general public, so let’s discuss them.
In this case that the Mann Group’s lawyer was consulted on, the general plot is as follows: the person involved learned about a certain project on the internet, and according to the project party, they could invest Chinese yuan to purchase USDT on the platform, and then unlock it and earn high profits every month. With a trial mentality, the person made an initial investment, and as expected, the principal and interest were returned after six months. After successful verification, the person decided to continue increasing their investment. The first few months were still able to be released as usual, but they felt that the speed of capital recirculation was a bit slow. At this time, the project staff told them that they could invite others to join, which would speed up the unlocking process.
The person thought, it’s a good investment opportunity, and by inviting others, they could accelerate the unlocking process. It sounded good, so they recommended several friends to join this platform.
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As is often the case with educational legal programs, unexpected events occurred. The project party was collectively arrested, and they don’t know if they can recover the several hundred thousand yuan they invested.
This project involves cryptocurrency lock-up. We are all familiar with “lock-up”. From a positive perspective, it is a means commonly used by project parties in the cryptocurrency industry to increase security and circulation stability. Some lock-up for a certain period of time, some lock-up a certain amount, and some rely on conditions to unlock.
In the previous bull market, many fundraising project parties relied on lock-up tricks to control the market. They usually promised a good interest rate based on the currency, such as 20% annualized. Users felt that they were making a lot of profit, so they rushed to participate and “seek lock-up”.
And then, they were harvested…
You don’t have to wait until your assets are unfrozen. The market maker has already completed market making, cashed out at a high price, and left, leaving users forced to bear the painful consequence of being forced to sell at a loss.
Of course, times are advancing, and that is already the gameplay of the last generation, and everyone has become desensitized to the old methods. If the scam doesn’t update, scammers will also experience FOMO (fear of missing out).
Returning to our case, it is indeed keeping up with the times. After experiencing a cycle of bull and bear markets, it has become difficult to convince users to participate in lock-up by offering interest income.
02 “Go back and change the crutches, sell them next year”
Just like the case mentioned at the beginning of the article, now many project parties are using new tricks to attract players. The new trick is that lock-up is still required, but as long as you introduce new people, your unlocking process will be accelerated. The more people you introduce, the faster the unlocking process. The people you introduce can also introduce new people, and a whole set of rules will be calculated for you, which will eventually be converted into benefits. In short, the more people you introduce, the sooner you can cash out, regardless of the impending disaster.
How about it, does it feel familiar? This is very similar to the core gameplay of the famous MMM Ponzi scheme (3M scam) that was very popular in the early years.
The so-called 3M scam was invented by a Russian named Mavrodi. The essence of the scam is that the platform issues a virtual item called “Mavro” and investors need to purchase this item. After the purchase, after a 15-day freeze period, investors can find other investors to enter the scheme and wait for someone to buy their “Mavro” so that they can cash out and exit. The system automatically matches investors, with a matching period of 1 to 14 days. During the waiting period, there is a daily interest of 1%, which means you can earn 30% interest in 30 days. Orders cannot be canceled during the 15-day freeze period, otherwise the account will be frozen. After 15 days to 30 days, you can withdraw your principal and interest at any time.
Looking at it this way, the new scheme is just the leftovers of the 3M scam, a (technical) reincarnation. Of course, even so, it can’t stop the enthusiasm of the majority of users to get rich overnight, and they rush into this project one after another. The result is that only the earliest users can successfully withdraw their funds, and the game of passing the buck will definitely collapse due to the project’s unsustainability. When the older users join the project, the collapse will be imminent.
I wonder if the users standing at the police station’s report window remember the hot and humid summer afternoon in 2018 when the investment advisor recommended P2P projects to them.
Of course, the 3M scam also has familiar elements for us—they also issue a “Morgan Coin” claiming to be endorsed by Morgan Group, and you will earn money if you invest. Listen, what an advanced scheme, so it’s not just fashion that is a circle, even scams are.
03 Positive Suggestions
After all the rambling above, it’s not to mock our users, but to say that it’s actually quite simple to distinguish whether a project is a scam.
First of all, if a project looks problematic at first glance, it’s best not to participate. Many people think they won’t be the last “foolish hero” but often it turns out otherwise, they end up being used as fuel. Even if there are really people around you who can benefit, don’t blindly follow them. Rest assured, what goes around comes around.
Secondly, if the project party’s promises sound too good to be true and you listen with relish, nodding incessantly, fantasizing about getting rich overnight and reaching the pinnacle of life, then 97.40% of the time, this project is trying to scam you. Always remember, the cryptocurrency market is a field even more volatile than the stock market, and risk always goes hand in hand with returns. If a project promises huge returns, then the risk must be super high, it’s just that this risk either you may not have discovered yet, or it has been carefully hidden.
Finally, whether a project can make money is actually unknown, but whether a project is compliant can still be understood. When unsure, you can consult a lawyer. The Mankun team has conducted compliance evaluations on many projects currently on the market, which can be referred to.
In short, a compliant project does not necessarily guarantee profits, but it can reduce the probability of being deceived. Seeking stability is always the right choice.
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