How to tell if a cryptocurrency project is a Ponzi scheme

The crypto world has experienced an increase in Ponzi schemes since 2016 when the market gained mainstream prominence. Many shady investment programs are designed to take advantage of the hype behind cryptocurrency booms to beguile impressionable investors. Ponzi schemes have become rampant in the sector primarily due to the decentralized nature of blockchain technology which enables scammers to sidestep centralized monetary authorities who would otherwise flag or freeze suspicious transactions. The immutable nature of blockchain systems that makes fund transfers irreversible also works in the scammers’ favor by making it harder for Ponzi victims to get their money back. Speaking to Cointelegraph earlier this week, Johnny Lyu, CEO of crypto exchange KuCoin, said that the sector was fertile ground for these types of schemes due to one main reason: “The industry is full of users eager to invest their money, and there is virtually no regulation that would stop projects from hiding their malicious intentions.”

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