back to article Don't dive head first into that crypto pool, FBI warns

The FBI has warned cryptocurrency owners and would-be owners about a scam involving phony liquidity mining that the bureau says has cost victims more than $70 million in combined losses since 2019. Liquidity mining is an investment strategy that appears to reward investors for contributing some of their crypto assets to a pool …

  1. Bitsminer Silver badge


    Legitimate investment managers have a mandatory rule to follow -- Know Your Client.

    They must know the client's actual identity, their investment goals, their sophistication or lack, their total assets (rounded to the nearest, ummm, million), and so on.

    For crypto-currency investors, here is a set of KYS (Know Your Scammer) rules:

    - do they have a corporate name?

    - do they have an actual corporate address that Google Maps demonstrates is not an empty lot on 8th Ave in Detroit?

    - can you phone them?

    - can you google them?

    - can you identify the principals of the organization and get reasonable verification of their identities?

    - are they located in: Cyprus, Antigua, BVI, Jersey, Panama or Delaware?

    If any answers to the above are "yes", then run with your cash, and save yourself!

    1. Cederic Silver badge

      Re: KYC


      So if they have a corporate name, I can phone them and I can Google them, I should run?

      I guess that's true, in that I should just stay clear of crypto currencies anyway.

  2. IceC0ld

    I used to think that the old maxim of "there's one born every minute" was a tad harsh, seems possible it was actually WELL under the actual head count ffs :o(

    but the other maxim of a fool and his money, still holds true :o(

    1. Snake Silver badge


      It's interesting to read the Characteristics section of the Wiki article on a Ponzi scheme, and then listen to the claims of the promoters that "crypto" doesn't qualify

      1. Anonymous Coward
        Anonymous Coward

        Re: money

        It doesn't qualify because the profits aren't fabricated (in the sense that the exchange rate is genuine, albeit variable). It may be regarded as a pyramid scheme (if continuous, endless profits are promised) and Ponzi schemes may be run using purported cryptocurrency but they aren't inherently Ponzi schemes.

        1. katrinab Silver badge

          Re: money

          Actual direct purchase of coins may not be strictly a Ponzi scheme, but some of the other stuff built around it definitely is.

          1. Anonymous Coward
            Anonymous Coward

            Re: money

            Definitely. A Ponzi scheme can be built around just about anything that purports to generate returns.

          2. Michael Wojcik Silver badge

            Re: money

            Sure. But that doesn't excuse people who label everything "Ponzi scheme" willy-nilly without distinguishing Ponzi schemes from other types of fraud and foolishness.

        2. iron Silver badge

          Re: money

          Pretty sure any crypto profits this year have been fabricated.

          Ask Tesla about their -$160 million profit on Bitcoin.

          1. Anonymous Coward
            Anonymous Coward

            Re: money

            Yes, I'm sure the stock markets only go up too and never go down.

          2. Anonymous Coward
            Anonymous Coward

            Re: money

            Exactly, the fact that investors are aware of the losses directly debunks it being a Ponzi scheme.

  3. Anonymous Coward
    Anonymous Coward

    I think, therefore….

    …I am not scammed

  4. Henry Wertz 1 Gold badge

    It *is* kind of amazing

    It *is* kind of amazing... I mean, a few of the base crypto curencies (bitcoin at least) are NOT a ponzi scheme (any more than stocks or fiat currency) you have currency traders trading in bitcoin and a few of the larger cryptos just like you do in stocks and so on, and you have a limited supply of the currencies (bitcoin and a few others have mechanisms that prevent just churning out more significantly diluting the value of ones already held.) (Edit: that said they're too volatile for me to want to hold anything in them.. or get any expecting to buy anything with them since the price'd fluctuate too much. I'd treat them like volatile currencies to do currency trading, arbitrage, etc. with.) There certainly seem to be ones where they are a ponzi scheme, they can churn out as many as fast as they want, they produce a bunch, get a price spike, then when the first investors sell the chunk of them they got the exchange runs out of money and needless to say the value drops to zero with everyone else holding the bag.

    It is kind of amazing though, how many people will fall for a scam where if they described it using dollars they'd probably realize in 10 seconds it's a load of bull, but you throw the word "crypto" in there and the same person will decide they've been generously offered the magic method to risk free massive profits.

    And the number of scammy cryptocurrencies where they would try to guarantee a peg to some other crypto, or have nothing at all backing it (they could make as many as they wanted to, and in some cases did), or even ones where they were like "yeah we totally have a cryptocurrency, I mean there's no crypto exchanges with it yet and no way to transfer them but trust me". Yeah.

    1. Flocke Kroes Silver badge

      Re: It *is* kind of amazing

      The precise mechanism that allows someone to cash out of a ponzi scheme with a profit is that other people buy in with more money.

      The precise mechanism that allows someone to cash out of bitcoin with a profit is that other people buy in with more money.

      A manufacturing company can pay dividends to their share holders by selling goods at a higher value than the cost of the source materials and labour required for processing.

      Yes, it really is kind of amazing how some people perceive a difference and other don't.

    2. Stork Silver badge

      Re: It *is* kind of amazing

      I have to disagree. Stocks are a claim on future dividends of the company. Fiat currency can normally be used to buy goods and services, as well as paying taxes which gives it basic utility.

      Derivatives are usually based on some underlying real world claim or asset.

      Bitcoin et al are only of use if you manage to exchange it to fiat currency.

  5. Jan K.

    "... finally coax them into liquidity mining by dangling a one to three percent daily return on investment guarantee."

    One to three percent daily returns?

    Gotta be kidding!

    I only go in when two digits return rates are promised!

    Thumb Up

    I love reading (That link is NoScript friendly, btw)

  7. Anonymous Coward
    Anonymous Coward

    crypto on stocks

    Sometimes, broker scams can be the worst thing that can happen to anyone. You keep thinking of how to get your money back from the fraudsters. I'll be honest with you reading this, it's actually not easy getting your money back from a binary options scam. You'd have to be very dedicated and be able to trust the recovery expert you're working with. My case was a little scary because I lost more than a quarter million dollars to these fraudsters. But technology concept of ALLBONATECH was able to achieve success. I couldn't just let this question pass me by. Because, I was once a victim of this and I know how it feels to lose a lot of my to scammers.

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