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The Dark side of the Cuban Crypto Boom.
In the 1990s the fall of the Berlin wall brought many new things to the Eastern block: democratic elections, free markets and western jeans.
But it also brought Ponzi schemes and MLM scams.
In the 1990s the fall of the Berlin wall brought many new things to the Eastern block: democratic elections, free markets and western jeans.
But it also brought Ponzi schemes and MLM scams.
The size of these Ponzis was breathtaking.
In Romania the Caritas ponzi raised between 1 and 5 bn dollars. https://en.wikipedia.org/wiki/Caritas_(Ponzi_scheme)
In Romania the Caritas ponzi raised between 1 and 5 bn dollars. https://en.wikipedia.org/wiki/Caritas_(Ponzi_scheme)
In Albania, a Ponzi scheme got so out of hand it literally lead to a civil war. https://en.wikipedia.org/wiki/Albanian_Civil_War
Why were Eastern Europeans falling for these scams? Having lived in a planned economy for over a generation, there were simply few societal antibodies for Ponzi schemes and such. People simply didn't understand how the free market worked. They were easily mislead.
Political changes in the 1990s made it possible to run large scale Ponzi schemes in Eastern Europe, preying on a naive and impoverished population.
In Cuba today, the internet and cryptocurrencies have made it possible for scammers to repeat the trick.
In Cuba today, the internet and cryptocurrencies have made it possible for scammers to repeat the trick.
The two largest Ponzi schemes on the island today are TrustInvesting and Karatbars. They both claim some vague link with cryptocurrencies, but effectively only use cryptocurrencies to syphon away money from impoverished Cubans looking for a better life.
It is hard to know how big these scams have gotten, but anecdotally they are HUGE. Cubans are now googling TrustInvesting more than Che Guevara. Hundreds if not thousands of Cubans have put in their lifetime savings in these schemes.
Until a recent arrest of a TrustInvesting executive, authorities have done little to stem the tide of these scams. https://www.cubanet.org/noticias/detienen-por-actividad-economica-ilicita-a-director-de-trust-investing-en-cuba/
I believe the internet and cryptocurrencies are an important tool for freedom around the world. Like all novel technologies however, there are downsides to innovation. https://decrypt.co/50491/cuba-bitcoin-adoption
