A crypto MLM scam combines recruitment-based pay with promises of returns from cryptocurrency trading or tokens. The FTC says pay should come from sales to real customers, and a ‘product’ that is only an investment is a major red flag.

How They Work

Participants pay in, are told to recruit others and are promised returns from trading or tokens. Early payouts come from new deposits. Compare with Ponzi vs pyramid schemes and what a pyramid scheme is.

Warning Signs

Guaranteed returns, pressure to bring in friends, vague ‘proprietary’ trading and no real customers. Check compensation plan red flags and MLM vs pyramid scheme.

What to Do

Do not send money. Search regulator records, ask for written plans and talk to an independent adviser. See how to answer ‘is this a pyramid scheme?’.

If You Were Scammed

Report to the FTC, your state attorney general and the platform used, and keep records. Verify the specifics of any named case from regulator releases.

Key Takeaways

• Recruitment-based returns are the core flaw.
• Guaranteed profits are a red flag.
• Verify before you pay.
• Report scams.

Frequently Asked Questions

Is crypto MLM legal?

Schemes paying mainly for recruiting are illegal.

How can I tell?

Look for recruitment-based pay and guaranteed returns.

Where do I report?

ReportFraud.ftc.gov.

Can I recover money?

Sometimes; speak with authorities.

Sources

• FTC: Business Guidance Concerning Multi-Level Marketing
• FTC consumer advice: Multi-Level Marketing Businesses and Pyramid Schemes
• FTC: ReportFraud

QastMe does not endorse any company. Information is for education only and is not financial or legal advice. Earnings in direct selling vary widely, and most participants earn little or no money. Review each company’s income disclosure statement before deciding.

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