According to reports in local media, the unregulated cryptocurrency market in India is creating conditions for the proliferation of “Bitcoin-based pyramid schemes”.
The trend relates to small-size traders who are exploiting the no-rule status quo in order to set up multi-level marketing schemes based on Bitcoin.
Zebpay co-founder and CEO Saurabh Agrawal shares in an interview that the con approach is centered around the promise of lucrative returns against a growing number of new members joining the scheme. This works during the first few months, but then the balloon explodes and people lose all their money.
However, these claims still represent allegations only as no concrete example has been cited.
The situation in India combines a legislative vacuum with frequent government and central bank warnings on the potential dangers of using Bitcoin. On top of all, a currency crisis has been looming for the past four months, with some signs of mitigation as cash withdrawal restrictions were lifted on Monday.
Zebpay and Unocoin are among the pioneer local Bitcoin exchanges. Recently they announced a plan for joint action to attempt to self-regulate the digital currency market in the country.