Blockchain Associations in the East African Region have taken a posture drawing a line between Ponzi schemes and Cryptocurrencies. In a joint press release signed by associations’ leaders from Uganda, Rwanda, Kenya and Tanzania, the groups outlined how the public can distinguish between fraudulent investment schemes and digital currencies.
The statement further lamented how several scams parading as Cryptocurrencies have emerged in the region which are similar to other Ponzis. It is their view that these schemes are duping people of their hard-earned money while feeding on the ignorance of the public and distorting the opportunities Blockchain Technologies offer.
The release read in part:
“As industry bodies that understand the technology and the opportunities enabled by Cryptocurrencies, the Blockchain Associations in East Africa hereby issue this joint statement today, Monday 16 Dec 2019, as a guide to the general public to explain Cryptocurrencies and how to distinguish them from Ponzi schemes.”
Uganda last week was shaken by a Crypto scam that duped people of money running into millions of dollars. The purported currency, which is known as Dunamiscoin, allegedly fleeced thousands of unsuspecting clients when its directors skipped town.
Guidelines On Scam
In an outline differentiating Crypto from Fraudulent Investment Schemes, the associations described Cryptocurrency as a peer to peer exchange of value and how it works. It pointed out the underlying technology of Blockchain and its usage of cryptography.
The guidelines, moreover, addressed how there are thousands of Cryptocurrencies in the system today. These various digital currencies usages include investment, trade, software development with the purposes coded into their design.
Touching on regulation and legality, it stated that they differ according to geographical locations. “Legality varies per jurisdiction, with countries like Japan and the US accepting, regulating and taxing Cryptocurrencies while China is issuing its national digital currency,” the statement said.
Additionally, It noted that there are numerous Central Banks eagerly studying the technology and considering how to optimise the unique benefits while putting in place measures to alleviate risks.
Difference Between Crypto And Ponzi
The press release maintains Ponzi schemes are fraudulent investment scams promising high returns with little risks, and generating money for old investors by accepting new ones. It identified the features of Ponzis as lack of proper paperwork, minimum investor qualification and a network marketing without a product.
Similarly, the associations declared that the region is awash with several Ponzi schemes masquerading as Cryptocurrency business. Those entities prey on ignorance, luring the public with promises of high returns.
The statement categorically insisted that these are not Crypto businesses but are scams, many of whose leaders are already behind bars. Legitimate Crypto businesses do not require multi-level marketing, are built on Blockchains, have whitepapers and use coins that are exchanged publicly.
The associations’ leaders, therefore, urged the public to educate themselves on Cryptocurrencies, to remain vigilant against scams, and to join the fight against Ponzis. “A website with ‘Scam Alerts’ will be launched soon through which the public can report scams, and refer to for guidance,” the press release concluded.
Is Guidance Too Late?
The question QT is asking is whether the guidance is too late. Or the damage is irreparable considering the number of victims and the terrible reputation these bad nuts have given Cryptocurrency.
Umar Sebyala, a Cryptocurreurrency and DLT enthusiast from Kampala, Uganda, indicated in an interview with QT that some damage had been done. However, it’s still early days, and it possible to recover and clean up the image of Cryptocurrency in that part of the world.
“I believe a strong and united voice on scams in the East African Crypto space has been long overdue,” Seybala remarked. “In addition to guidelines, I believe the blockchain associations can arrange more regular Crypto community meetups, collaboration with governments and have a more active presence in the media.”
On the part of Kwame Rugunda, Chairman of the Blockchain Association of Uganda, who responded on Twitter, it is better late than never. Rugunda replied:
“I believe that it is never too late to do the right thing. Yes, harm has been done, but even greater harm has been averted through various local interventions. And because this is not just a local problem, a regional collaborative effort and intervention are necessary.”
Michael Kiberu Nagenda, CEO of Kipya, a prominent Blockchain Company assisting Rwanda to create a national digital currency agreed damage to Cryptoshere in the region is apparent. However, the measure is the right step, and the associations must do more on awareness with partners.