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Ponzi Scheme



The growth of cryptocurrency has been rising constantly over the past decade despite it not being regulated in most of the countries. An increase in the use of cryptocurrencies have also seen a steep rise in the amount of crypto-crimes globally. In 2021, the overall transaction volume of cryptocurrencies increased by 567% over that of 2020. It’s no surprise that more fraudsters are using bitcoin as a result of its rapid growth. One of the main reasons behind criminals being attracted towards cryptocurrency is its fictitious nature and effortless transfer of funds globally irrespective of the fact that cryptocurrencies can be traced and are unambiguous. “With many financial criminals cropping by the day, the authorities have become a lot more suspicious and hesitant to aid when it comes to crypto start-ups” , says Advocate P.M Mishra from Finlaw Associates.

The disappearance of BitConnect’s accused founder Satish Kumbhani has yet again led to regulatory authorities scrutinizing crypto start-ups. He was indicted of running an international Ponzi scheme which has been evaluated around 2.4 billion dollars. BlockFi’s US$100 million fine to satisfy authorities’ accusations establishes a precedent for other blockchain-based finance businesses that may face SEC investigation. BlockFi was also discovered to have been operating as an “unregistered investment firm” for more than 18 months, “because it issued securities and kept above 40% of its total assets…

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