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A NEW ERA OF CYBER-CRIMES

A new era of cyber-crime has arrived. The latest craze to hit the Ponzi/Illegal Pyramid Scheme marketplace deals with crypto-currencies. The rise in the price of BitCoin, the leading crypto-currency that is traded today, has caused hundreds of spin-off clones that are neither crypto nor a currency.

The vast majority of these new offerings use the MLM (Multi-Level Marketing) format, and therein lies the problem as to why they are illegal. For a MLM program to be considered legal, more than 50% of the revenue made from being a participant in the MLM program must come from retail customers. This simply means a customer, not someone that has been recruited to join the program in your downline. This also means that there must be a real product that can be purchased by a customer without having to join the program to purchase it. To try to get around this 50% rule, the crypto-currency programs are offering educational material that is to educate you about crypto-currencies and all the aspects that involve the mining and terminology associated with crypto-currencies. The problem is this educational material is highly overpriced and instead of receiving the coins, you are given tokens that can be traded into coins when they do their ICO (Initial Coin Offering). Also most of the educational material they provide has been plagiarized from other educational resources and is not their educational material at all.

The crypto-currency MLM programs that only offer their crypto-currency to their members, there cannot be any retail customers, and therefore all income is earned from signing people up in the program. This very fact is what makes these programs an illegal pyramid scheme. The other portion of this type of program is that the crypto-currency they are mining is only available to members in the program; as the coin is not traded on the open market. Thus adding to the illegality of the program.

The SEC (Securities and Exchange Commission) has issued a warning that any ICO (Initial Coin Offering) that is not approved by the SEC is illegal. An ICO is considered a security and all securities must be registered with the SEC to be legal in the United States.

Does this mean that all crypto-currencies are illegal? No. The legal crypto-currencies trade on the open market and their trading can be followed on the exchanges where they are traded. Two helpful websites are:  https://coinmarketcap.com/ which provides a listing of the crypto-currencies that are being traded in the world and their market capitalization, and https://www.worldcoinindex.com/ which is a listing of the most traded crypto-currencies on the market exchanges.

You must understand that investing in crypto-currencies is highly speculative and you should only invest money you can afford to lose. Bitcoin has traded as high as over $22,000 per coin, but has fallen back to just over $10,000 per coin, and all of that within a 3-4 month period of time. So you can see the volatility of trading in crypto-currencies.

For any crypto-currency to have longevity requires there are merchants who will accept the crypto-currency coin to buy their goods or services. The more merchants that accept a coin, the better chance it has of being successful in the future. It is just my opinion, but I do not see the volatility and speculative nature of crypto-currencies to settle down for several years to come.

The attraction of the crypto-currency is its anonymity. The buyer and seller of the crypto-currency is unknown. The only known part of crypto-currency is the actual mining of the coin and it exists. The mining of the coin and the successful mined coin are visible to all to see. No auditing is required from a third party source.

Because of the volatility and the anonymity of the crypto-coin, we see the government agencies worldwide piercing this vail of secrecy. Already there has been a court case here in the US brought by the IRS against a company that holds crypto-currencies in their electronic vault for their clients. An agreement was reached that the company would have to disclose their clients basic information that owned more than $20,000 in their crypto-coins. This is the first in a long line of actions that we see taking place in the coming months and years.

In fact we will be shocked if the world’s governments do not come out with their own crypto-currency within the next two years. We know that many are looking into doing just that. For if they do, it will add stability to the marketplace and will make it safer for businesses to accept the crypto-coin. It also gets rid of the anonymity of the coin.

At the present time, Bitcoin and a couple of the other top crypto-coins are the darlings of organized crime, human trafficking rings, child pornography rings, drug dealers, and Ponzi’s/Illegal Pyramid Schemes as they can launder money electronically without anyone knowing who is moving the money and to whom. It also makes it almost impossible for law enforcement to get subpoena’s to track the money transfers to follow the money trail.

In closing, we do believe that crypto-currencies are the wave of the future, but right now they are all highly speculative investments, and should only be bought by those who can afford to lose their money if it all goes south. Any program that is offering a stated guaranteed rate of return of their crypto-currency is a Ponzi or Illegal Pyramid Scheme. The rise and fall of the price of Bitcoin should be a clear illustration a set rate of return is impossible and cannot be guaranteed.