Escape MLM Crypto Schemes: Avoid Unrealistic Returns And Recruitment Traps

Escape MLM Crypto Schemes
Avoiding MLM crypto schemes will help you protect yourself from unrealistic returns and recruitment traps. Secure your investments by reading this article.

Have you come across a new scheme that claims to make you rich instantly? I am sure that sounds exciting. We know how the story goes.  It’s when a person invests a particular amount of money and promises you enormous returns. But it is mostly a bogus scheme. 

In a world buzzing with the promise of extraordinary gains and futuristic technologies, the realm of cryptocurrency has captured the imagination of many. However, amidst the genuine opportunities lies a shadowy realm of fraudulent schemes that exploit the growing interest in crypto. 

Picture this: you’re told that you’ll get enormously rich, and all you have to do is recruit people to join an investing scheme, ask them to recruit people, and so on. The catch is there is no get-rich investing scheme, and you’ll lose your money to a fraudster. 

As the allure of quick riches intensifies, so does the prevalence of scammers that prey on the innocent, making it imperative for investors to stay vigilant and informed. 

In this edition of “Dumb Ways to Lose Money”, this blog unveils the stark reality of MLM (Multi-level Marketing) crypto schemes, shedding light on their tactics of luring unsuspecting investors with unrealistic returns and recruitment allure.

Understanding MLM Crypto Schemes

MLM, also known as network marketing, involves participants investing in a cryptocurrency scheme and recruiting others to join. It is a controversial business strategy creating a network of investors, each with the potential to earn not only from your investments but also a portion of earnings from the investments of your recruits. 

It’s like a chain wherein you invest in a cryptocurrency plan and bring in more people to invest as well. As these new investors join, the ones at the top of the hierarchy can earn money from what they put in, and their recruits invest. 

In crypto, MLM often promises impressive returns and passive income, making it attractive. After all, who wouldn’t want their passive income to become their primary income source?

However, it’s important to be cautious. While it might seem easy to make money, it can also be risky. Hence, you must be careful before getting involved.

How MLM Operates In Crypto

A crypto MLM scheme is similar to regular MLM ones. The only difference is you’re promised earnings in crypto instead of a traditional asset. Here are the steps to identify an MLM scheme in the cryptocurrency world.

  • Investment tiers: Scammers invite you to invest various amounts for diverse rewards. The more you invest, the more they guarantee you’ll make.
  • Recruit others: You’re told to bring in more people to join. You get a fraction of their investment as a reward when they invest.
  • Earnings from downline: As your recruits bring in more people, you keep getting a share of the money they invest. This can grow fast as your network keeps growing.
  • Promoting tokens or products: Scammers provide you with a Bitcoin token or merchandise to advertise. Your earnings are determined by how successfully you market it.
  • Focus on growing quickly: MLMs want many people to get involved fast since more people mean more earnings.

Note: Not all MLMs are bad, but you must be careful. Do your research, talk to experts and people you know, and be cautious before you put your money and time into these schemes.

Key Differences Between MLM Crypto Schemes And Crypto Ponzi Schemes

While it’s easy to confuse these fraudulent practices, some key differences exist between MLM Crypto Schemes and Crypto Ponzi Schemes.

Basis of distinction

MLM Crypto Schemes

Crypto Ponzi Schemes

Key focus

Promotes earning from referrals. This scheme runs on the idea that The more people you hire, the more you can earn from your referrals.

Does not necessarily involve recruitment. The key here is to get new investors to invest so the schemers can pay the early investors and create the illusion of earnings to attract new investors.


May involve a coin or a token.

Does not involve a coin or a token.


Wants the investor to pay a fee, buy digital money and recruit people.

Wants the investor to only invest in digital money.


If more people are recruited and it pays off everyone as they keep recruiting, the chain only grows. In most cases, MLM crypto schemes collapse in a few months.

Crypto Ponzi schemes collapse as they might run out of new investors to pay the existing investors.

Red Flags Of MLM Crypto Schemes

MLM schemes want you to pay a fee, buy digital money, and get others to join. Here are more signs of these schemes in the crypto world:

  1. They promise huge and steady profits, even though cryptocurrencies can be quite volatile.
  2. They market it as a scheme with little or no risk, which is usually too good to be true.
  3. If the people behind a crypto project are secret, it could be a scam.
  4. If a crypto company does big, flashy ads, they might be tricking you.
  5. These scams often come from places without licences or rules.
  6. The companies making these scams usually make things confusing, with massive fees and many rules.
  7. They might not have the proper info, like plans and explanations. 
  8. Anyone can join without any special requirements.
  9. If you can’t take out your money or they advise you to put more in, it’s bad news.
  10. There could be mistakes in your money statements or how much they say you’ll get. 
  11. If the cryptocurrency or token does not highlight utility and technology, it’s a scam.
  12. If it involves recruiting people, then it is a possible MLM Scheme

Real-life examples

In the previous sections, we discussed how the MLM scheme operates, and the red flags to look out for. We also discussed the differences between MLM and Ponzi schemes. We shall now look into the real-life examples of crypto MLM schemes.

BitClub Network

BitClub Network, a mining pool promised its investors exorbitant profits on their investments. However, this later proved to be a fraudulent scheme, with over $722 million in stolen bitcoin. 

Investors were enticed into the BitClub Network between April 2014 and December 2019. The founders specifically targeted naive investors to the network. 

This network evolved to become the largest crypto MLM scheme, targeting nations in Asia, Africa, and Europe. Many investors lost money when the scam failed around the time the directors were jailed.


OneCoin, a well-known MLM scheme claimed to be a cryptocurrency investment opportunity. It promised huge profits through its trading platform and encouraged people to invest and recruit others. 

However, investigations later revealed that OneCoin was a fraudulent scheme with no real blockchain or cryptocurrency. OneCoin marketed itself as an educational platform selling different levels of cryptocurrency education packages. 

These packages supposedly contained information about blockchain technology and cryptocurrency trading. The company informed investors that by acquiring these packages, they would acquire OneTokens. These OneTokens could be “mined” and increased in value over time.

The promise of high returns lured people in, but the scheme eventually collapsed, leaving many investors with significant losses. 

Social media played a crucial role in the promotion of these schemes. BitConnect and OneCoin utilised platforms like YouTube, Twitter, and Facebook to share success stories, testimonials, and information about their projects. They created a sense of urgency and excitement by highlighting individuals who claimed to have made significant profits, enticing others to join in.

Quick Tips To Protect Yourself From MLM Schemes

  • Before you invest in any crypto, do your homework. Read their info, trusted news, and what others say about them.
  • Know who’s in charge of the project. Check if people like them and if they’re well-known.
  • Be careful with big profit promises. 
  • Be cautious if you get unexpected offers to join. They might be trying too hard to bring you to sign up.
  • Make sure they’re allowed to do what they do. Look for licences and certificates. For DeFi projects, check if experts verify them.
  • Don’t risk too much. Have a plan, and don’t invest all your money, even if the schemes promise high returns.

Protecting Loved Ones From MLM Crypto Schemes: Share Awareness

If you’re lucky, you can withdraw some of your investment before the scheme unravels. After regaining your assets, or even if you can’t regain them by spreading awareness about MLM crypto schemes, you play a vital role in ensuring their financial well-being. 

Share reliable sources of information about cryptocurrencies and investments. Misinformation can easily lead to poor decisions, so relying on well-established platforms is crucial. 

Share educational resources, insightful articles, and trustworthy information on your social media platforms to empower others to avoid these pitfalls. It is also essential to draw strict boundaries, be assertive in your decisions, and not give in to sales pitches.

How To Protect Yourself From Scammers When Investing In Cryptocurrency

Investing in cryptocurrencies can be both exciting and profitable, but it’s important to approach it wisely. Here are some legitimate investment alternatives for cryptocurrencies:

1. Reputable Exchanges

Trusted cryptocurrency exchanges provide a secure platform to buy, sell, and trade cryptocurrencies. Look for exchanges with a strong reputation, user-friendly interfaces, and robust security measures.

2. Established Coins

Investing in well-established cryptocurrencies can be a more stable option. These coins have a proven track record and are less likely to be associated with scams.

3. Long-term Investment Strategies

Long-term investing involves holding onto your chosen cryptocurrencies for an extended period, allowing them to appreciate over time potentially. 

4. Research And Education

Before investing, take the time to research and understand the cryptocurrencies you’re interested in. Learn about their use cases, technology, development teams, and market trends.

Remember, patience, research, and risk management are key to successful cryptocurrency investing. While the crypto market can be volatile, making informed decisions and using reputable tools and platforms can help you navigate it safely and potentially achieve your investment goals.

Diversifying a crypto portfolio is crucial and essential because it helps mitigate risks associated with the volatile cryptocurrency market.  


Do not give into these schemes without researching enough just because they seem like a once-in-a-lifetime opportunity. Investing in anything that makes you persuade your friends and relatives, like a sales agent, is rarely going to pay off. The dangers of MLM crypto schemes are significant and can lead to financial loss and disappointment. 

Educating yourself and being vigilant can protect your hard-earned money from falling prey to these deceptive schemes. Visionaries and scammers both arise in times of turmoil. Choose wisely. Want to read more such content? Subscribe to our “Dumb Ways to Lose Money” newsletter to keep your hard-earned money safe from scammers.


Stay up to date with latest crypto news and events. Subscribe to our newsletter