[2017-03-14] Mint: Bitcoin-based pyramid schemes flourish in regulatory vacuum

Bitcoin-based pyramid schemes flourishing in regulatory vacuum

http://www.livemint.com/Industry/T2vj9S40bVtKkTSxs49QqM/Bitcoinbased-pyramid-schemes-flourishing-in-regulatory-vacu.html

Some small-time traders are taking advantage of the absence of rules governing crypto-currencies in India by creating multi-level marketing (MLM) or pyramid-like schemes with bitcoin as the base product.

The issue of multi-level marketing schemes is a global problem; however, these are now gaining traction in India owing to a lack of governing guidelines and the rapid rise in value of the crypto-currency, according to Digital Assets and Blockchain Foundation of India (DABFI), a self regulatory organization for bitcoin and blockchain companies.

“People form companies that promise lucrative returns and indeed give them for the first few months. This is in exchange for bringing in more members under them who will buy bitcoins and bring in newer members. This goes on till it explodes and the people lose all their money,” said Saurabh Agrawal, co-founder and chief executive officer, Zebpay, an app-enabled bitcoin exchange.