The FTC has announced that they’ve issued temporary restraining orders and frozen the assets of a team of three defendants who pitched investment advice as the Bitcoin Funding Team and My7Network. The FTC claims that the defendants “promised big rewards for a small payment of bitcoin or Litecoin.”

From the report:

According to the FTC, Bitcoin Funding Team and My7Network participants could only generate revenue by recruiting new participants and convincing them to also pay cryptocurrency. For example, Bitcoin Funding Team participants were required to make an initial bitcoin payment to an earlier participant and pay a fee to Bitcoin Funding Team. With these payments, participants were eligible to recruit new members and receive payments from them. Promoters claimed participants could earn bigger rewards if they paid additional bitcoins.

In short, this was a traditional Ponzi scheme wrapped in crypto clothing. It is important to note that the use of cryptocurrency in this case was not the FTC’s primary complaint in this case and that the defendants would have ran afoul of the law if they requested cash or checks or any other method of payment.

“This case shows that scammers always find new ways to market old schemes, which is why the FTC will remain vigilant regardless of the platform – or currency used,” said Tom Pahl, Acting Director of the FTC’s Bureau of Consumer Protection. “The schemes the defendants promoted were designed to enrich those at the top at the expense of everyone else.”

Further, another defendant, Scott Chandler, pitched the Bitcoin Funding Team and something called Jetcoin (or, more precisely, Jet-coin). “Jetcoin also promoted a recruitment scheme and additionally promised investors a fixed rate of return on their initial bitcoin investments as a result of bitcoin trading. In a series of promotional calls, Chandler claimed Jetcoin participants could double their investment in 50 days,” said the FTC.

One victim posted a message in July claiming that this team promised big returns and did not deliver. “I joined Gladiacoin where they agreed to pay 2.2% per day when you bought pakcages w/Bitcoin,” wrote the user, Lisa Criss. “Right after joining they changed their % to less, they also had several days where they didn’t pay, then they said you have to pay a 15% fee or they wouldn’t give you your earnings. Then they closed down. I lost about $400. Then there was Jet-coin, started at 4%, then went down to 3.3, then went to 1.1% per day.”

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