At the request of the Federal Trade Commission (FTC), a federal court has halted the activities of three individuals who allegedly promoted deceptive money making schemes involving cryptocurrencies.
The FTC alleges that Thomas Dluca, Louis Gatto and Eric Pinkston promoted two chain referral schemes known respectively as Bitcoin Funding Team and My7Network. Using websites, YouTube videos, social media and conference calls, the defendants promised big rewards for a small program (read: scheme) enrollment fee. The fee could be paid in Bitcoin or Litecoin.
Dluca, Gatto and Pinkston claimed that Bitcoin Funding Team could turn a payment of the equivalent of just over $100 into $80,000 in monthly income. The FTC alleges, however, that the structure of the schemes ensured that few would benefit. In fact, the majority of participants would fail to recoup their initial investments.
According to the FTC, Bitcoin Funding Team and My7Network participants could only generate revenue by recruiting new participants and convincing them to also pay cryptocurrency – a typical Ponzi scheme.
“This case shows that scammers always find new ways to market old schemes, which is why the FTC will remain vigilant regardless of the platform – or currency used,” Tom Pahl, Acting Director of the FTC’s Bureau of Consumer Protection, said in a press release. “The schemes the defendants promoted were designed to enrich those at the top at the expense of everyone else.”
YNOT has reported on the recent explosion in initial coin offerings (ICOs), or “token sales,” as well as on cautions from experts suggesting cryptocurrency investment be left… to experts.
As with any investment — or perhaps even more so than with most investments — putting money into an ICO is not something that should be taken lightly. If ever there was a call for being particularly thorough when doing due diligence, it’s when investing in one of these crypto-startups — including those that seem to be popping up in every corner of the adult space.
