Bitcoin Forum

In most countries Ponzi schemes are illegal and looking at the rules discussion of illegal activities or selling of illegal things are not allowed.

Why are they not moderated in this is the case? Ponzi schemes are usually easy to spot as these days there is not much of an effort that gets put in them. I know the current stance of the forum against ponzi schemes is they are not removed.

I want to know why this is if they are illegal in the majority of the countries. Doesn't this forum have to follow the laws that its hosted in?

I believe it does not apply since the forum didn't create the content - it just hosts it.

Ripoffreport has been using this legal "loophole" - successfully - for years.

Actually I don't think ponzis are inherantly illegal. If you tell people in your terms and conditions and they agree to them, then it's up to them whether to follow it or not.
False advertising is the illegal part not the idea behind it.


The forum is supposed to be quite impartial it would take a lot of effort to ge through and delete everything that was a ponzi or everything that looks like a ponzi.

There scam ICOs too and forum not remove it, that does not mean they agree with it, that is why there is DT members if you report a Ponzi schemes project or a post advertising Ponzi schemes website they will get instant tagged by DT members same as reporting ICOs .

I am sure ponzi is illegal in all countries.

Nonsense.

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To be honest this is very interesting topic.

For example, if someone try to sell fixed sport games, topic will be removed because it is illegal to sell fixed games.
Ponzi is also illegal but it is not moderated.

Why are fixed sport games moderated? I mean, both are illegal and both are scams.

It depends on country to country depending upon the laws (?). There are loopholes or hidden agendas in these ponzi schemes sometimes which may cover things up, but yeah in most cases it is illegal. Read this for more information : https://www.quora.com/Why-is-a-ponzi-scheme-illegal

http://qr.ae/TUpsAM
http://qr.ae/TUpsAU

From the link posted above here are two examples.

In the most upvoted reply: social security does the same thing. There are other things that function in the same way, if you think of the financial crisis of 2009 was due to banks becoming more like ponzi schemes and not having enough actual money in their posession and being in too much debt with the government banks. If you think also about insurance companies, sure they have methods of reducing the amount they have to pay if they really need to and to sort out other stuff, but if thousands of people needed to claim against a few million dollars of losses each, that insurance company would collapse.

Excuse me, but in which country is investment fraud legal?

https://en.wikipedia.org/wiki/Ponzi_scheme

It is scam, it is illegal and it is investment fraud. I am not sure which part of that you don't understand.

Like I said, there are loopholes in these, in legal terms. I did read somewhere that, if a particular investment which looks like a ponzi and has failed in its capital raising, it may not be illegal. I am not very much sure on this, but I do know that there are loopholes to get out of legal consequences.

When I see Ponzi I automatically think of Bitconnect, do you think stuff like bitconnect should be legal, stealing money of thousands of people?

I'm not a lawyer by any means, but I don't think that's true.

I just posted in another thread where MagicSmoker asked if Ponzis were moderated here, and in the thread he was referring to, it wasn't explicitly stated that the offer was a ponzi--and most of them are like that anyway.  Those are illegal, I'm pretty sure.  When I posted my answer, I was wondering the same thing as OP.  Bitcointalk doesn't allow other illegal things, like drugs & kiddie porn, so I don't know why it lets people offer up Ponzi schemes as investment opportunities.

There is nothing about legality of something here, there is only the question of greed and stupidity.

Pyramid schemes are illegal. They are often hard to destinguish from MLM which is legal (but dodgy). Pyramid schemes often target people in developing countries where such schemes are illegal but usually not prosecuted. Pyramid schemes and their participants will always claim they are legal or "unregulated" and will continue claiming it till they are prosecuted.

The question is what do you ban or moderate ? Pump and dump coins are scams too. High return masternode coins will eventually fail too. Just like a ponzi.

KYC account sales are illegal too.

Interestingly that loophole tends to work with criminal law but usually not with civil law. A website can be held accountable (at least in commonwealth jurisdictions) for defamation if they publish untrue statements.

Although "didn't create the content" arguement isn't working well for pirate bay, silk road or kim dotcom.

A federal court stated that victims have "probable cause to sue for extortion and racketeering". http://en.m.wikipedia.org/wiki/Ripoff_Report

There is a difference between a publisher and a distributor. 

Think about a newspaper vs the newspaper stand (or bookstore, corner store selling newspapers etc).  One can be held liable the other is generally not.

Forums do not create (publish) content they simply distribute it.  The author publishes the post, the forum distributes it.

Forums can be looked at as the equivalent to a brick and mortar bookstore.  A book store is not required to read every sentence of every book and then vet it legally everywhere its sold, neither is a forum.

Unless the forum changes a post and or specifically endorses it courts have for the most part regarded forums as distributors.

Vod is correct and it is not a loophole it's put in place to not restrict freedom of speech, if the distributors had to vet and take responsibility for everything they distributed they would ultimately sell significantly less material for fear of liability in any area they sold (which could be wildly different).  This puts the liability exactly where it should, the person making the statements and not the person/company distributing the information.

In case of bitcointalk they are doing the right thing. They remove posts when directed by law enforcement.

The ripoffreport however is a different story. The wheels are finally falling of:

http://www.phoenixnewtimes.com/news/the-real-rip-off-report-6445677
http://drjaniceduffy.com/2017/05/ed-magedson-ripoff-report-darren-meade-sued-for-60-million/
http://drjaniceduffy.com/2017/05/ed-magedson-ripoff-report-darren-meade-obstruction-of-justice/

May not be an expert of the law here, but I can safely say pyramid schemes are illegal in all countries. The problem I feel is that investors still have the mindset that if they are not the last ones to enter the scheme, they can make money out of it (which is technically true). So I believe the problem that pozi schemes still pop up is because there's always demand for it, "intelligent" people trying to be the early adopters of it and hoping that others will follow suit after them. At the end of the day, it becomes a game of who arrived first and who arrived last. We need the help of the whole community to report it as soon as it surfaces, that's the only way I believe we can stop such scammers from getting undeserving profits from others

I'd define a Ponzi scheme as different to what is suggested there. But in their case, there isn't a legitimate version of it.


As they claim it's not outrightly stated there so that is an illegal Ponzi.

If you have been active victim of such a scam or ponzi scheme, you can challenge it in the court. You can also share that on this forum or other bitcoin related platforms with proof.  It would consume a lot of resources for the forum to mediate this. If the accused project is also breaking some forum rule, you can report it.

Nope. Bitcointalk does not have any kind of liability whatsover as they are not the ones providing the scams. Let us make this an easier example, We all know by now that Facebook is the number one Social Media site being used by a lot of people everyday in FB and through its messenger you will see a lot of scams happening from Facebook groups and  through its chatting service. But even though scams are openly happening to FB it doesn't make them liable for the user's losses as first of all the transaction only involves two parties which is the victim and the scammer, FB on the otherhand provides as means of communication for both, it doesn't even make their site as an accessory to the crime. Secondly it is in the user's discretion on transacting with another party online, FB does have the power to monitor everything but by doing so they will violate our privacy. The same can be said to BCT as they are simply not part of any liability.

I think forum cannot do much in stopping this ponzi scheme until some evidence is displayed against any of it. But I think its more about our selection and how we select a project by studying it first and then investing in it. This will take us away from most of the ponzi scheme so blind investing will result in fall to the ponzi scheme.

My question was more related to two rules conflicting that anything illegal will be removed but ponzi schemes remain on the forum and won't be removed by moderators. I'm pretty sure that almost all countries find ponzi schemes illegal. I can't find a list of countries that have banned it

I think marlboroza already answered that quite accurately and bluntly.

Yes which backs up my claim that the two rules conflict. Ponzi schemes are illegal all of the countries that I know of and should be removed according to the rules.

Ponzis are usually identified by tagging negative trust. While the signs are relatively easy to identify it is harder to prove definitively that it is a ponzi. Unlike some selling illegal drugs - which would be easy to identify and prove is illegal.

Now days it is almost impossible to prove that project is a ponzi scheme. All of them are masked under MLM companies that are completely LEGAL or under Cloud Mining services, that are LEGAL too. There is also a new and very interesting crypto ponzi scheme, called company revenue shares... Some crypto companies are offering to the token holders the share from their monthly revenues. For example. I invested $1000 and bought the tokens. Every month the company is issuing the statement about their monthly revenue and that revenue is paid to all token holders. Nobody knows if the numbers in that statements are correct, because no external audit is allowed. I know a person who invested $4500 in such project and he is getting $2-4 a week. Yes TWO OR FOUR DOLLARS A WEEK. It means that he needs more than 10 years just to get his money back. That is a well masked PONZI and there is no way to PROVE it. 

I agree.


It depends completely on how the revenue is generated. A small return like that is sustainable in ordinary commerce situations. If genuine revenue is generated then it isn't a ponzi. If new investment is used to pay old investors then it has the elements of a ponzi. This can sometimes be detected by following the blockchain payments.

ICO tokens that pay a "dividend" run into new risks - being an unregistered security.

Howey Test (USA)
It is an investment of money ☑
There is an expectation of profits from the investment ☑
The investment of money is in a common enterprise ☑
Any profit comes from the efforts of a promoter or third party ☑

https://caselaw.findlaw.com/us-supreme-court/328/293.html
https://apps.americanbar.org/buslaw/newsletter/0014/materials/investmentch2.pdf

Commonwealth law is a bit different but the test is symilar.
https://asic.gov.au/regulatory-resources/digital-transformation/initial-coin-offerings-and-crypto-currency/#when