Cloud Token Revealed to Be a Ponzi Scheme by Chinese Police
- The Cloud token is supposed to be an e-wallet with dividend payments.
- Over 70 suspects have been arrested by Chinese police.
The cryptocurrency industry has gotten a bad reputation through the years for the scams that have plagued it, and another one has recently been added to the ranks. In the same way that BitConnect and Plus Token were discovered to be Ponzi schemes, so has the Cloud Token according to a report and AZC News. But what exactly is it?
Cloud Token was set to be an e-wallet, making it the first one in the world to host every single cryptocurrency on the same blockchain network. The goal advertised to consumers was to develop an ecosystem that has one of the most advanced blockchains around, and the mobile payment system was set to be done entirely through the Cloud Token wallet.
The multi-level marketing technique of the Cloud Token is the giveaway, requiring a high referral fee to get involved. With BitConnect, hodlers get paid dividends, while Plus token is a wallet for dividend payments that are based on a token holding rate. If the project of the Cloud Token follows along with similar structures, they may be on their way to failure too.
The Cloud Token works in much of the same way that the Plus token did, saying that the number of tokens held by the user will determine the dividends paid. However, unlike some schemes, this project specifically zeroes in on the markets in China and Korea.
Based on reports from China, the local police have managed to crack the Ponzi scheme. In the process, the authorities have already arrested over 70 suspects and discovered a theft of $4 million.
Taiyuan police successfully cracked the first case of cloud currency platform trading virtual currency with blockchain in this city, captured 72 suspects, there were more than 300 victims and involving more than $4 million.
— Crypto Even (@Crypto_Even) December 23, 2019
While the website is still functioning normally, it seems that the withdrawals started to slow and ultimately stop by November 2019. There’s no information on whether these users are going to be seeing a refund. Still, if this project takes the same path as the scheme before it, the fake executives may be trying to take off with the funds.
Cryptocurrency continues to be a difficult place for consumers to navigate, and the bad actors aren’t making the circumstances any easier. While there are plenty of ways to carefully preserve crypto assets, consumers may want to prioritize staying away from platforms with high referral fees and the promise of dividend payments – they don’t seem to be following through as anticipated.