Crypto Glossary

Pyramid Scheme

A pyramid scheme is a scam with a hierarchical top-down structure.

What Is a Pyramid Scheme?

A pyramid scheme, like a Ponzi Scheme, is a “get-rich-quick” swindle that benefits those who sit at the top of the organization.

With pyramid scheme, there doesn’t need to be a specific product for sale. Instead, the scheme may prey on individuals seeking to make money by asking them to pay a fee to join the organization. Those who join are promised money from the individuals that they recruit. The pyramid scheme is structured such that those on top gain money, while those on the bottom typically lose money. Pyramid schemes are one of the oldest scams in the book, but unfortunately remain to be relevant due to their predatory and manipulative tactics. 

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