East African Blockchain Associations Releases Joint Statement On Cryptocurrency, Ponzi Schemes

The emergence of Ponzi schemes in Africa, claiming to be cryptocurency related businesses has been on the increase since the emergence of the global virtual currency in 2009, with the intention to defraud unsuspecting investors with little knowledge or by feeding distorted information about cyptocurrency and blockchain to them.

Four Cryptocurrency Associations representing four East African countries, Blockchain Association of Kenya (BAK), Blockchain Association of Uganda, Blockchain Rwanda and Blockchain Community, Tanzania,  issued a joint statement on Monday, 16th December, 2019, as a guide to the general public, to explain cryptocurrencies and how to differentiate them from Ponzi schemes.

In the statement, they covered topical themes in the cryptocurrency space like the definition of Cryptocurrency, its use and how to identify a Ponzi scheme.

On cryptocurrency, they defined it as,

“A digital asset that allows for Peer to Peer (P2P) exchanges of values and uses cryptography to guarantee its safety.”

Blockchain Technology on the other hand, was the technology that supported cryptocurency and every other “crypto” in the world.

Since 2009, after the advent of Bitcoin, thousands of different cryptocurrencies have hit the market, with their different purposes like trade, software development, investments, etc, coded into their designs. They stated that those called stable coins, “were pegged to hard assets and national currencies.” And were useful for “everyday business transactions and ideal for deepening financial inclusion.”

On their legality and regulations, they observed that several countries like Japan and USA were openly accepting of the virtual currency trend, even regulating and taxing it too. However, other countries like China, have declared open war on cryptocurencies since 2017, and now, on the verge of issuing their own virtual currency, the Crypto-yuan.

Several Central Banks and National Financial Institutions are keenly studying cryptocurrencies, in a bid to understand its benefits to use it optimally, while putting out measures to reduce the risks of using them.

Ponzi schemes on the other hand, was defined as;

“fraudulent investment scams promising high returns with little risk and generating money for old investors by acquiring new ones.”

East African Blockchain Associations Releases Joint Statement On Cryptocurrency, Ponzi Schemes 2

On how to differentiate legit cryptocurency transactions from Ponzi schemes, they advised the public to note that, legitimate crypto businesses did not require multi-level marketing, are built on blockchain, have white paper and use coins that can be publicly exchanged, unlike Ponzi Schemes that made promises of high return with little risks, little investor qualification, lack of paper work and a network marketing system devoid of a product.

They also noted that the modus operandi of Ponzi schemes were similar and not limited to only virtual currencies, as it could also work with the dollar, pound, franc, etc.

Though they acknowledged that a lot of work has been put in to sanitize the East African Crypto space, as several Ponzi schemers have been arrested, they however, implored the discretion of the general public and to educate themselves appropriately as this will make them less susceptible to the deception and the scam.

They promised that a website with “Scam Alerts” would be launched soon, where cryptocurrency scammers and group could be reported for blacklisting and investigation.

It can be recalled that Nigeria self-regulatory Blockchain body, Stakeholders in Blockchain Association of Nigeria (SIBAN) recently introduced it’s Scam List, to bring about Sanity in Nigeria cryptospace.

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