Editing Ponzi scheme (section)

=== Cryptocurrency Ponzi ===
[[Cryptocurrency|Cryptocurrencies]] have been employed by scammers attempting a new generation of Ponzi schemes. For example, misuse of [[initial coin offering]]s, or "ICOs", has been one such method,<ref>{{cite book |last=Nestarcova |first=Dominika |date=2019 |title=A Critical Appraisal of Initial Coin Offerings. Lifting the "Digital Token's Veil" |location=Leiden/Boston |publisher=Brill |pages=43 |isbn=978-90-04-41657-4}}</ref><ref name=cryptoatlantic>{{Cite news|url=https://www.theatlantic.com/technology/archive/2017/05/cryptocurrency-ponzi-schemes/528624/|title=The Rise of Cryptocurrency Ponzi Schemes|last=Morris|first=David Z.|work=The Atlantic|access-date=2017-06-28|language=en-US}}</ref> known as "''smart Ponzis''" per the ''[[Financial Times]]''.<ref name=cryptoft>{{Cite web|url=https://ftalphaville.ft.com/2017/06/01/2189634/its-not-just-a-ponzi-its-a-smart-ponzi/|title=It's not just a Ponzi, it's a 'smart' Ponzi|first1=Izabella|last1=Kaminska|date=2017-06-01|website=[[FT Alphaville]]|language=en|access-date=2017-07-20}}</ref> Most schemes have a low recovery rate with investors losing their funds permanently.<ref>{{cite book |last1=Mukherjee |first1=Sanmoy |last2=Larkin |first2=Charles |last3=Corbet |first3=Shaen |date=2022 |editor-last=Corbet |editor-first=Shaen |title=Understanding Cryptocurrency Fraud. The challenges and headwinds to regulate digital currencies |location=Boston/Berlin |publisher=De Gruyter |pages=118 |chapter=Cryptocurrency Ponzi schemes |isbn=978-3-11-071688-7}}</ref> 

The novelty of ICOs means that there is currently a lack of regulatory clarity on the classification of these financial devices, allowing scammers wide leeway to develop Ponzi schemes using these pseudo-assets.<ref>{{cite book |last=Nestarcova |first=Dominika |date=2019 |title=A Critical Appraisal of Initial Coin Offerings. Lifting the "Digital Token's Veil" |location=Leiden/Boston |publisher=Brill |pages=43 f |isbn=978-90-04-41657-4}}</ref> Also, the pseudonymity of cryptocurrency transactions and their international nature involving countless jurisdictions in many different countries can make it much more difficult to identify and take legal action (whether civil or criminal) against perpetrators.<ref>{{cite book |last1=Rao |first1=Sandeep |date=2022 |editor-last=Corbet |editor-first=Shaen |title=Understanding Cryptocurrency Fraud. The challenges and headwinds to regulate digital currencies |location=Boston/Berlin |publisher=De Gruyter |pages=80 |chapter=Mt. Gox – The fall of a giant |isbn=978-3-11-071688-7}}</ref><ref>{{cite book |last=Nestarcova |first=Dominika |date=2019 |title=A Critical Appraisal of Initial Coin Offerings. Lifting the "Digital Token's Veil" |location=Leiden/Boston |publisher=Brill |pages=43 f |isbn=978-90-04-41657-4}} Cf. {{cite web |url=https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11 |title=Statement on Cryptocurrencies and Initial Coin Offerings |last=Clayton |first=Jay |author-link=Jay Clayton (attorney) |date=11 December 2017 |publisher=U.S. Securities and Exchange Commission (SEC) |access-date=January 13, 2023 |quote=Please also recognize that these markets span national borders and that significant trading may occur on systems and platforms outside the United States.  Your invested funds may quickly travel overseas without your knowledge.  As a result, risks can be amplified, including the risk that market regulators, such as the SEC, may not be able to effectively pursue bad actors or recover funds.}}</ref>

The May 2022 collapse of [[TerraUSD]], a [[stablecoin]] propped up by a complex algorithmic mechanism offering 20% yields, was described as "Ponzinomics" by [[Wired (magazine)|''Wired'']].<ref>{{Cite magazine|url=https://www.wired.com/story/terra-luna-collapse/|title=Terra's Crypto Meltdown Was Inevitable|first=Gian M.|last=Volpicelli|magazine=Wired |via=www.wired.com}}</ref> Another example of a well known Ponzi scheme involving cryptoassets was the ICO of ''AriseBank'' or ''AriseCoin'', involving claims about founding the world's first "decentralized bank". The [[U.S. Securities and Exchange Commission|SEC]] successfully recovered the funds stolen in the ICO.<ref>{{cite book |last=Nestarcova |first=Dominika |date=2019 |title=A Critical Appraisal of Initial Coin Offerings. Lifting the "Digital Token's Veil" |location=Leiden/Boston |publisher=Brill |pages=43 |isbn=978-90-04-41657-4}} Cf. {{cite web |url=https://www.sec.gov/news/press-release/2018-8 |title=SEC Halts Alleged Initial Coin Offering Scam |author=<!--Not stated--> |date=30 January 2018 |publisher=U.S. Securities and Exchange Commission (SEC) |access-date=January 13, 2023}}</ref> A similar scheme was perpetrated by the founders of the fraudulent cryptocurrency [[Bitconnect]].<ref>{{cite book |last=Girasa |first=Rosario |date=2022 |title=Regulation of Cryptocurrencies and Blockchain Technologies. National and International Perspectives |location=Pleasantville |publisher=Palgrave |pages=184 f |chapter=Criminal Prosecutions and Civil Litigation Concerning Blockchain Technologies |isbn=978-3-319-78508-0 |doi=10.1007/978-3-319-78509-7}}</ref><ref>For further examples of Ponzi schemes involving cryptocurrencies see {{cite book |last1=Mukherjee |first1=Sanmoy |last2=Larkin |first2=Charles |last3=Corbet |first3=Shaen |date=2022 |editor-last=Corbet |editor-first=Shaen |title=Understanding Cryptocurrency Fraud. The challenges and headwinds to regulate digital currencies |location=Boston/Berlin |publisher=De Gruyter |pages=111–117 |chapter=Cryptocurrency Ponzi schemes |isbn=978-3-11-071688-7}}</ref>

In September 2022, [[Jamie Dimon]], CEO of JPMorgan, described cryptocurrencies as "Decentralised Ponzi Schemes".<ref>{{cite web | url=https://www.finextra.com/newsarticle/41002/jpmorgan-chief-calls-crypto-a-decentralised-ponzi-scheme | title=JPMorgan chief calls crypto a 'decentralised Ponzi scheme' | date=23 September 2022 }}</ref>