Recently, another cryptocurrency Ponzi scheme was exposed. The US Securities and Exchange Commission (SEC) has announced a lawsuit against the operator of the Trade Coin Club, claiming it is a massive crypto Ponzi scheme.

The SEC said the Trade Coin Club founder and three U.S. promoters raised more than 82,000 bitcoins, worth $295 million at the time, from more than 100,000 investors around the world between 2016 and 2018. The Trade Coin Club promises bots to make "millions of microtransactions" per second, offering investors a minimum daily return of 0.35%. The SEC pointed out that the user benefits of the platform are entirely from the funds invested by new users, not the so-called robot arbitrage trading, which relies on the typical operation of the latter to compensate the former.

"There may be more companies committing fraud under conditions of poor management."

Amid the risk of a recession in the United States and the growing selling pressure on U.S. stocks, the SEC warned that more companies may be committing fraud under poorly run conditions.

In fact, cases of cryptocurrency scams taking advantage of investors' interest in digital assets are not uncommon overseas. In early August, the SEC charged 11 people, including the founding and marketing team of cryptocurrency platform Forsage, with involvement in a cryptocurrency Ponzi scheme involving more than $300 million and affecting millions of retail investors around the world.

In the current crypto industry, crypto trading platforms assume the roles of both brokers and exchanges, and these unregulated platforms can misappropriate customers' trading funds at will. As a result, once there is a break in funds, these trading platforms cannot repay their clients' trading funds. With the increasing speculation, speculation, fraud and other activities related to virtual currencies, investors also need to strengthen their own prevention.

Source: FX110