J.P Koning: Stablecoins Have a Fraud Issue They're Not Addressing

Published on by Coindesk | Published on

A few years ago I wrote about one of the first big Ponzi schemes, POWH3D, which at its peak held $40 million in ETH. Last year, the FairWin scheme harvested as much as $10 million worth of ETH before it was drained.

MMM Blockchain Smart Contract, or MMM BSC, is the newest apparent Ponzi to appear on Ethereum.

According to the Securities and Exchange Commission, a Ponzi is a form of fraud that "Involves the payment of purported returns to existing investors from funds contributed by new investors".

Versions of Mavrodi's MMM scheme operated across the globe between the early 1990s until his death in 2018.What differentiates MMM BSC from previous Ethereum Ponzis is that it doesn't use ETH as its currency.

Thanks to the transparency of the Ethereum blockchain, we can learn plenty of details about the apparent MMM BSC Ponzi.

Back in 2017, PayPal was accused of allowing an $134 million Ponzi to operate.

The allure of profits is why billions of dollars in illegal money was allowed to filter through Danske Bank's Estonian branch from 2007 to 2015.On the other hand, the SEC deems Ponzi schemes to be unlawful.

MMM BSC is apparently a Ponzi scheme, and Ponzis are illegal.

With so many innocent low-income households having tied their hopes and dreams to a Ponzi masquerading as a legitimate opportunity, Paxos will have to tread gingerly.

Paxos' adoption by apparent Ponzi scheme operators captures some of the underlying paradoxes of blockchains and stablecoins.

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