Unemployment and idleness are factors that play in favor of these fraudulent schemes. The only way to make money with these systems is by taking it away from another.
The world has almost stopped and many economic activities have been paralyzed due to the current COVID-19 pandemic. However, it is possible to observe a resurgence of pyramid schemes, Ponzi systems, and other fraudulent organizations. They use Bitcoin, other cryptocurrencies, binaries, and trading, among others, to take advantage of so many idle and desperate people who are locked in their homes, without producing, spending, and even unemployed due to the quarantine.
Coronavirus seriously affected many economic sectors: tourism, non-food retail trading, transportation, textiles, consumer durables, and leisure and cultural activities. In Latin America, 44% of workers participate in these high-risk sectors, which is why the International Labor Organization (ILO) has estimated that 17 million people in the region have lost their jobs.
This shows that a large number of people will have to survive on their savings or find new forms of income in order not to starve. This desperate group of people is surely the perfect victims for any type of pyramid schemes, which offer “safe” businesses with non-transparent conditions.
The current idleness of people has led many unscrupulous entities to search for new victims on their social networks to run their fraudulent schemes. This would explain why some famous actors have joined to promote them.
The volume of advertising messages from these schemes has increasingly become viral. Offers to “become your own boss” and “get rich working from your cell phone”, among other stories, reach people residing in Latin America. Besides, there are other more sophisticated fraudulent systems with Ethereum smart contracts, whose promoters probably think that they achieve more credibility.
It is striking that people who understand some of the new technologies want to use their knowledge about them to impress the unwary, show it as the “new business of the century”. Due to their complexity, they create multiple forms of deception. These range from a clear pyramid scheme that uses blockchain technology to the ICO (Initial Coin Offer) fever of 2017, where they stole more than USD 100 million.
It is important that those who are thinking about entering a pyramid scheme out of desperation or because it is “big business” become aware of it. The only way to profit from these systems is by attracting other people to enter, who can eventually lose their money if they do not do it.
These “projects” harm the relatives and friends of those who invite them to participate in them, hoping to make a few US dollars instantly, which is not ethical. Given that these businesses look “too good to be true,” their own instincts tell them that there is surely something wrong in them. If they agree to enter that type of schemes, they could become victims like those of the AirBit Club in Mexico, who have long struggled to recover their money.
By Willmen Blanco