It’s not a bitcoin scam, Mr. Xian Gaza reiterates. Rather, it’s a scam that uses bitcoin as a front. The strategy is to lure people to give you money which, in turn, will be invested in bitcoin. However, Mr. Gaza claims, the collected money just rests in a money pool at the top of the scheme.
No one wants to cash out because bitcoin’s value is rising. Lured investors don’t touch the payouts. They reinvest it. They don’t know that nothing is actually being invested. The payouts they receive are coming from new recruits.
Whether what Mr. Gaza claims is true or not, we will say this early – never invest in something you don’t know. More about this later in the article.
Mr. Gaza first rose to public awareness when he invited actress Erich Gonzales for a coffee via a billboard invitation. He got turned down. Soon after that, Mr. Gaza then became something of an (in)famous internet star in the country.
How the Scam Works
In Mr. Gaza’s video, on top of the scheme is a syndicate that lured operators in the Philippines. Each operator has his or her own rules. The strategy, of course, is simple – invite people to invest in bitcoin using real money. This money is transferred from the investors to the operators until it reaches the top.
Like a typical scheme, every referral you get nets you some payouts. Just like a typical scheme, the more you invite, the more referral fees you get.
With bitcoin’s value surging week after week, there are interest payouts. Operators will claim, because the value of bitcoin has gone up, here are your interest payouts.
But bitcoin is hyped. There is big money. The investor has a choice. He can get his share of the interest in the capital he invested. Or he can put back that interest money so that it becomes part of his capital. If he chooses the latter, no money changes hands. It just sits in the money pool.
Investors think the interest is put back to be invested in bitcoin. In reality, it sits at the top. For those who choose to get the payout, the money does not come from the interest. It comes out from the money being poured in by new recruits.
At some point, the scheme will collapse.
Or at some point, bitcoin will crash. The operators will use that as an exit plan, Gaza claimed. Hey, bitcoin crashed, so the money is lost. That’s how it would be. That’s how cryptocurrency works. It’s volatile. That’s the exit plan. No one can claim that they ran with the money if bitcoin crashed.
Is Bitcoin a Scam?
In the situation above, certain elements are using bitcoin as a front into making people invest. The money is not invested in bitcoin, but it just sits at a money pool on the top.
Mr. Gaza is out of the country. He claims there’s a Php 5M bounty on his head, put out by the syndicate. Whether he is telling the truth or not, the fact remains – bitcoin will be used to facilitate money schemes. At the moment, no one is backing up his claims.
Bitcoin can become the motivator for abuse. In the past, a torrent company silently installed a bitcoin mining software in computers connected to it. Some weeks ago, we reported a bitcoin text message scam that has spread in Australia. This will not end. And let’s not get started with ICOs that promise nothing.
We urge the public to invest only in something you know. Invest only an amount you can afford to lose.
And no matter what others tell you – if you wish to invest, do it yourself. Resources are available on the Internet to help you.