In 2017 and 2018, by comparison, the various schemes and fraudulent activity was $3 billion combined.
The schemes are prolific, with 90 percent of the pilfered funds coming from just six widespread schemes.
The way the schemes work is illustrated in the case of PlusToken, in which victims were asked to purchase amounts of the coin in the hundreds, promised that the purchase would be fruitful for them and their earnings would be compounded with interest.
However, upon purchasing the cryptocurrency from PlusToken, users would eventually find that the sites didn’t work and they couldn’t get their money out.
Things came to a head in June of last year, when Chinese authorities arrested six people in connection with a scam PlusToken was running. Many people who had bought cryptocurrency through the program lost everything they had supposedly purchased.
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PlusToken, according to those familiar with the matter, was a Ponzi scheme where the site was able to draw around $2 million total out of investors located in South Korea and China from 2018 to early 2019. Chainalysis, the New York-based firm that works with clients like the Federal Bureau of Investigations in order to track scams and fraud, said the trend has been that Ponzi schemes mimicking investment opportunities have proven effective at leeching money away from victims.
Since bitcoin was introduced over a decade ago, cryptocurrency has become widespread — and many people are drawn to it as a potential way to get rich. Perpetrators of fraud and Ponzi schemes use that naivete against them, according to experts like Christopher Janczewski, a special agent at the Internal Revenue Service, who has worked with crypto-fraud cases.
Janczewski called it “traditional crime dressed up,” and said the scams prey on people’s fear or confusion about new trends and potentially missing them.
Reports of high percentages of weak checks on cryptocurrency, along with the reported fraud, have prompted calls for regulation on the new forms of currency.
