BTN News: In recent years, phrases like “let your money work for you” have become rallying cries for thousands of Latin Americans inspired by tales of instant success—stories of individuals who invested in Bitcoin and, without lifting a finger, became millionaires, or of young people under 30 who travel the world, drive Ferraris, and date models thanks to discovering money-multiplying apps. The temptation is enormous, especially when these success stories offer to “share their secret.” However, the losses are often just as significant.
According to Chainalysis, a cybersecurity organization, Argentina alone saw cryptocurrency scams amounting to $100 million within two years. In 2024, authorities dismantled Money Shelter, accused of being a pyramid scheme that promised 5% monthly returns through supposed trading of financial assets like cryptocurrencies.
Money Shelter exemplified modern pyramid schemes: promoted on social media, flaunting a lavish lifestyle (world travel, expensive restaurants, luxury products, parties where money was given away, and even “Wolf of Wall Street” posters in offices), and promising “financial freedom.” Yago Nahuel Escobar, a muscular rugby player with bleached hair, was the most visible leader. He branded himself as an “educator” on LinkedIn and used TikTok to dispense financial advice, allegedly to live off trading. Escobar was captured, and authorities revealed he had bounced checks amounting to 1.5 million Argentine pesos ($1,600).
In Venezuela, another alleged pyramid scheme with similar characteristics, Soles Bot, collapsed. Its founder, Raúl Soles, a social media personality, claimed the application used artificial intelligence to trade cryptocurrencies. By June of this year, Soles Bot’s accounts were closed, and its leader vanished, leaving thousands of Venezuelans, including migrants, penniless.
In the Dominican Republic, pyramid schemes seem almost commonplace. Since 2022, at least five high-impact cases have been under investigation: ‘Mantequilla,’ Goarbit, Jairo González, Digital Kingdom, and Investor Winner, with the latter’s potential scam estimated at over $50 million. Mery Apolinario, one of the victims, lamented, “I sold a house and lost everything.”
Journalist Hogla Pérez notes that these schemes recurrently affect members of evangelical churches in the Dominican Republic, often convinced to invest by their pastors. In the Investor case, a pastor is among the main accused, with ten other religious leaders involved, claiming they were also duped. Pérez adds, “The scammers infiltrated churches via NGOs providing aid to gain trust.”
Despite media and authority warnings, many Dominicans continue to fall for these easy money offers. This phenomenon isn’t isolated to Latin America; pyramid schemes surface annually from the United States to Chile. For instance, this year, Eli Regalado, a pastor in Denver, Colorado, was accused of defrauding his congregation, claiming divine inspiration to sell cryptocurrencies. He amassed $3.2 million and led a life of luxury until his scheme was uncovered. In another case, the SEC charged 17 members of CryptoFX, a firm that swindled over $300 million, predominantly from Latino victims.
Economic vulnerability seems to be a common factor in the spread of these scams across different political systems. In Venezuela, these schemes have reached massive proportions, involving entire families. Some participants enter knowingly, hoping to profit and exit before the pyramid collapses. As one Venezuelan explained, “I joined with $100, involved my mother-in-law, my mom, my wife, and a friend. I gained, my wife recovered her money, but then it fell. It was a known risk.”
Eddy Sánchez, a Bolivian technology consultant and systems engineer, explains that early investors in these schemes are paid with the funds of later entrants, until the scheme becomes unsustainable and collapses. Another common feature is the charismatic leader who flaunts wealth and luxury, persuading others to invest with promises of similar success.
Pyramid schemes have a long history and have used various products to lure victims, from internet telephony systems like Telexfree, which defrauded thousands in Brazil, to so-called “magic cheeses” in Chile. Today, the fascination with cryptocurrencies and the general lack of understanding about how they work make them the perfect bait. Colombian financial consultant Rodrigo Soto advises skepticism when promoters promise extraordinary returns. He highlights that while trading cryptocurrencies can yield significant profits, it is also highly volatile and risky. A legitimate conservative portfolio might yield 7-8% annually, with an aggressive one potentially reaching 12-14%, but never 100%.
Soto and Sánchez recommend verifying whether the company is registered with regulatory bodies and has a verifiable financial history. Many fraudulent schemes avoid transparency, citing fears of their methods being copied. “If they only explain the gains but not the process of achieving them, it’s likely a scam,” Sánchez concludes.
Cryptocurrencies, defined by the Bank of Spain as digital payment instruments based on blockchain technology, do not have geographical limits and are not backed by central banks. Their value fluctuates based on supply and demand, and they are considered high-risk speculative assets rather than official currency.
The most recognized cryptocurrencies include Bitcoin, Ethereum, and Cardano. While they offer significant profit potential, they are also highly susceptible to fraud, particularly in economically vulnerable regions.
