A group of scammers connected with Swiscoin, a multi-level marketing scheme disguised as a cryptocurrency, were arrested in Ukraine earlier this week. Police discovered cash and illegal weapons on the scammers’ property; so far, these criminals face up to 12 years in prison.
The Ukrainian Prosecutor General’s Office said in a recent statement, “In order to attract individuals as investors for this project, cybercriminals were spreading false information about the receipt of excess profits in exchange for cash when buying Swiscoin on the Internet or during private meetings.” 
Cult-like “evangelizing” is a common tactic that scammers use to get innocent people mixed up in their schemes. Scammers hold “exclusive meet-ups” in which guests are told that they must act fast and invest as much as they can in “this amazing, once-in-a-lifetime opportunity”.
There are crazy amounts of money flying around in the crypto sphere, and becoming a millionaire overnight is within the realm of possibility. However, any coin that is promising extremely high returns should cause anyone to do an about-face.
A Textbook Multi-Level Marketing Scheme
All the tell-tale signs of a cryptocurrency ponzi scheme are present on the Swiscoin website. There are lots of jargon and buzzwords; it’s “the new generation of payment network”, but no technical information or whitepaper ever existed about the “coin”. Apparently, “founders of some MNC companies and some from Asia, all invest in Swiscoins” (their grammar, not mine). None of these investors are specified anywhere on the site.
No exchange ever carried Swiscoin. It has no blockchain, and it cannot be mined, forged, or harvested.
Similar to Onecoin, which recently saw the beginnings of several state-waged legal battles against them, Swiscoin offered investors “packages” of coins that can be bought for fixed prices. The “beginner” package would get you 1000 tokens for US$100; the largest package, called the “Premium Seller”, got you 150,000 Swiscoins for US$11,000.
After purchase, these packages were converted into Swiscoins. The alleged value of a single Swiscoin was purportedly dependent on the amount of money flowing into the company; in reality, the money flowing into Swiscoin was going directly into the pockets of the scammers behind it.
The catch came far too late for Swiscoin customers. Those who invested in Swiscoin were not given the option of taking their money back out, or faced great difficulty when they attempted to.
Swiscoin’s Predatory Marketing Tactics
Just to make things a little more authentic-looking, Swiscoin included a section on their website explaining “Swiscoin’s Downsides”–by their own words, Swiscoin’s security is “still some way from perfect”.
Exactly what “some way from perfect” means is never explained, and really, the creators should have known to pick something else to list as a potential downside, for a couple of reasons: 1) blockchain technology is generally very secure, and 2) any serious user or investor in cryptocurrency would immediately run screaming from a system that doesn’t even claim to keep their assets safe.
Additionally, Swiscoin claimed that their absence on any major exchange (or any exchange at all, for that matter) was due to the reluctance of exchanges to accept new coins. Therefore, “even those who want to use Swiscoin can find their options extremely limited”–another serious deterrent for serious crypto users and investors.
This faux show of a sort of honesty and concern, along with the promises of high returns–although a clear red flag for seasoned crypto users and investors–are clear attempts to prey upon people who didn’t know any better.
A Sign of the Times: Global Crackdown on Coin Scams
The arrest of the Swiscoin scammers is one event in a series of actions taken against crypto scammers across the globe. Along with the allegations brought against Onecoin last week, Greek police arrested Alexander Vinnik, who laundered US$4 billion through his market exchange (BTC-e), in late July.
As cryptocurrency becomes more “mainstream” in the fintech world, it is becoming more regulated. Suddenly, governments are keeping a watchful eye on the crypto world. Although some users believe that the very nature of cryptocurrency requires that it be unregulated, many others are hesitant to adopt its use before legal protections are put in place. When scams like Swiscoin are uncovered, it’s not hard to see why.