Well I can think of one crypto currency that definitely Was a Ponzi scheme.
The intriguing case of Ruja Ignatova and One Coin - the Crypto Queen.
She was a confidence trickster who sold a crypto currency by alliance with the operators in the Multi-Level Marketing businesses in many countries around the world.
The podcast The Missing Cryptoqueen is available on the BBC.
https://www.bbc.co.uk/programmes/p0
She was added to the FBI top ten most wanted in June. She is estimated to have made off with $1 Billion, which puts her up there with Elizabeth Holmes of the Theranos blood testing scam.
Just as crpto currencies have an underlying technology of block chain. Scammers use psychological techniques to convince investors that they are are the brilliant guru that can solve the worlds ills with some magical and mysterious technical marvel. This is the ‘madness of crowds’ and there are communities which are prone to it. In the case of finance, there are large parts of the world that have very under developed financial systems and they fall victim to these sorts of scams because of the importance of the foreign remittances and the money transfer market. Bypassing and improving on international money transfer seems to be the main business case of crypto currencies. Poor people working away from home have an interest in such services…and so do international criminals who want to move their ill gotten gains out of the reach of the authorities.
Cryptocurrencies are targeted by con artists and the financial authorities in developed economies are keen to regulate them and there is obviously an element of protectionism where the owners of existing financial systems are keem to protect their investment. This will eventually settle down when they find a way to make money out of it. You don’t hear many protests from the music and film producers these days about being robbed by evil people copying DVDs and music. They have gone quiet because they are making a lot of money out streaming services and leveraging their back catalogues.
This kind of syndrome is common when new technologies disrupt existing markets. They get targeted by criminals and suppressed by regulators acting on behalf of vested interests who benefit from the status quo and are not keen on change.
Crypto currencies will find application outside the frame work of existing regulation because there are many economies in the world that are isolated from the international financial market that enables to free movement of capital. A similar similar situation prevails with mobile payments using to transfer small amounts of captial using credits. These systems are finding a lot of traction in African countries.
Eventually this will settle down but it would be wiser to embrace these technologies and help countries move capital around easily rather than try to suppress these methods. At the moment we are in the prohibition phase and just a handful of countries have adopted a cryptocurrency in defiance of the international banking community and their national regulators. This will change.
But for now crypto currencies have a poor image and are targeted by scammers pretending to by prophets and gurus and robbing people of their savings. They do use confidence tricks and at least one was sold very like a Ponzi scheme. Ironically, Ruja never actually created a crypto currency. She found it was not necessary for her scam. She simply sold the idea and some ‘tokens’ for a crypto currency course and an exchange where they could be traded. This was enough for many investors for whom online accounts are a new and exciting innovation. Sadly many who lost money were people who were not at all rich and lived in very poor countries with little alternative financial infrastructure. That is a tragic.
On the other hand dabbling in crypto and trying to spot the opportunities and the scams is an engaging hobby somewhat like gambling. Entertaining, as long as you do not get addicted and lose your shirt. It has become a hobby for many during the last couple of years idleness during the lockdowns.
I think there is the potential for some decent movies to be made using some of these stories from the dark side of the crypto world.