What are the warning signs that a cryptocurrency project might be a Ponzi scheme?

3 answers

• saeid sobhani ghahramanloo saeJun 18, 2025 · 5 months ago
  One warning sign that a cryptocurrency project might be a Ponzi scheme is if it promises unusually high returns with little to no risk. If an investment opportunity sounds too good to be true, it probably is. Another red flag is if the project relies heavily on recruiting new investors to sustain the returns of existing investors. This is a characteristic of a classic Ponzi scheme. Additionally, if the project lacks transparency and fails to provide clear information about its team, technology, or business model, it could be a sign of fraudulent activity. It's important to thoroughly research and evaluate any cryptocurrency project before investing to avoid falling victim to a Ponzi scheme.
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• Alexis_GNov 02, 2021 · 4 years ago
  When evaluating a cryptocurrency project, be cautious if it offers a multi-level marketing (MLM) structure or promises referral bonuses for recruiting new investors. MLM structures are often associated with Ponzi schemes, as they rely on constant recruitment to sustain the scheme. Another warning sign is if the project's whitepaper or marketing materials contain exaggerated claims or unrealistic projections. Legitimate projects focus on the technology and the problem they aim to solve, rather than making grand promises of overnight wealth. Remember, if it seems too good to be true, it probably is.
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• rocky marsMay 17, 2022 · 3 years ago
  As an expert in the cryptocurrency industry, I can tell you that one of the warning signs that a cryptocurrency project might be a Ponzi scheme is if it lacks a clear and viable business model. Legitimate projects have a well-defined purpose and a plan for generating revenue. Another red flag is if the project's team members have a history of involvement in previous scams or fraudulent activities. It's crucial to conduct thorough background checks on the team members and assess their credibility. Additionally, if the project's token distribution heavily favors the early investors or team members, it could indicate a Ponzi scheme where the early adopters are rewarded at the expense of later investors.
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