PonziCoin Early Exit Suspected

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PonziCoin Website

PonziCoin was a very early service where users would send bitcoin and recieve more back (or lose their funds if they were too late). One day, the anonymous individual running it stopped paying out and disappeared. It doesn't appear that anyone got their funds back, though only a small amount was lost.

About PonziCoin

"Allow me to introduce PonziCoin. Having grown increasingly tired of waiting around for owners of other Ponzi games to manually process payments, or worse, run away with the coins, and being a bit of a "techie", I challenged myself to build a more sophisticated script, which not only automates every payment, but uses the entirety of the wallet balance in every payment round meaning at the end of the game, there will only be a few satoshi's left (at best) e.g. nothing I could run away with!"

"The only Ponzi with an escrow reserve!" "Deposit between 0.01 and 0.1 for your chance to receive a 120% return!" "Rounds will automatically restart, with plenty of notice, when deposits begin to slow down." "The last deposit of each round is always guarenteed their 120% payout!"

"PonziCoin is a gambling game based on a Ponzi-type model. Before depositing, users should understand and accept the risks associated with this model. Payments will, and can only be made, once new deposits have been made. Should the system reach a confirmed deposit which is older than 12 hours, the game automatically resets." "PonziCoin charges a 5% fee. This helps cover the running costs of the site and provides the additional coins needed to repay the last deposit in every round. Due to this, the on-site balance will be slightly less than that shown on sites such as BlockChain.info."

Homepage:

The only Ponzi with an escrow reserve!

Deposit between 0.01 and 0.1 for your chance to receive a 120% return!

Rounds will automatically restart, with plenty of notice, when deposits begin to slow down.

The last deposit of each round is always guarenteed their 120% payout!

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

After changing the original post to guarantee a higher payout, it appears that Vortuarackne just simply decided to stop making any payments to subsequent investors.

Key Event Timeline - PonziCoin Exits Early

Date	Event	Description
February 19th, 2014 5:57:17 AM MST	PonziCoin Announcement	The PonziCoin is first announced on BitcoinTalk. "Allow me to introduce PonziCoin. Having grown increasingly tired of waiting around for owners of other Ponzi games to manually process payments, or worse, run away with the coins, and being a bit of a "techie", I challenged myself to build a more sophisticated script, which not only automates every payment, but uses the entirety of the wallet balance in every payment round meaning at the end of the game, there will only be a few satoshi's left (at best) e.g. nothing I could run away with!"
March 9th, 2014 2:13:43 PM MDT	Edit on BitcoinTalk Post	The BitcoinTalk original post is edited to post an announcement that "As of round #7, the last deposit in every round is guaranteed to be paid out at 200%!!!!".
March 9th, 2014 4:05:28 PM MDT	No Payouts Happening	A BitcoinTalk user reports that "vortu is offline lolz and no payouts".
March 9th, 2014 4:39:36 PM MDT	Reddit Post About Event	A Reddit discussion happens about the event. The post on Reddit discusses the humorous situation where the operator of a Bitcoin ponzi website called Ponzicoin decides to run away without paying out the investors. The post includes a link to the Ponzicoin website and reactions from the Bitcoin community. The comments highlight the irony of people getting upset about losing money in a scheme with "ponzi" in its name and discuss the nature of ponzi schemes and gambling in the Bitcoin community. Some users find it amusing, while others express frustration at the lack of understanding among investors. Overall, the post captures the reactions and discussions within the Bitcoin community regarding this particular incident.
March 9th, 2014 4:45:29 PM MDT	Websites All Offline	BitcoinTalk users report that "mini.ponzicoin is also halted.  Read the writing on the wall, folks.  Sucks, but that's the ponzi game for you."
March 10th, 2014 3:03:05 AM MDT	Community Cynicism	The community discussion turns more critical of the participants in the scheme "What a bunch of derps. See what greed gets you?".
March 12th, 2014 5:32:43 PM MDT	Website Captured	The PonziCoin.co website is captured for the only time by Internet Archive.

Technical Details

A ponzi scheme works by paying out early participants from the deposits of later participants. This original PonziCoin website was run by the BitcoinTalk user Vortuarackne, who directly handled the pay-outs. Without using a smart contract, there was nothing to uphold the rules.

After changing the original post to guarantee a higher payout, it appears that Vortuarackne just simply decided to stop making any payments to subsequent investors.

Total Amount Lost

The total amount lost has been estimated at $7,000 USD.

Immediate Reactions

Community discussions took place on Reddit and BitcoinTalk.

"If they had sticked to their own rules and payed out the earliest n players winnings until the Jackpot is empty then it would have been perfectly ok, what has happened here is after a few successful rounds of the game they suddenly just took the jackpot and ran with it."

"I'm contacting privacyguardian.org (the registrar he used). They have a special form for reporting abuse. Will see how that goes."

"I feel so stu.Pid, i deposited 0.8 that was all i have. [I] lost 1btc to s.cams nd ponzis nd now probably 0..7 more, i am really done with it! i still have some hope that it is just a technical pb."

"It sucks to lose a bet, but I don't see how anyone here was "scammed." This was a well-advertised Ponzi scheme that paid out more than it took in, until it collapsed. Hopefully it was at least educational."

"We are chocked not bc the ponzi stopped from lack of investors, it is the 7th round... But bc the owner ran away with the money without paying anyone. From the outside we may look like freaks but please understand that he built trust very efficiently. I have still hope of getting back my money, i evaluate the probability at 7%"

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

"This is darwinism in its purest form. You are willingly participating in a ponzi scam, which make you a bunch of scammers as you want to profit from earlier investors money, and thus you deserve to be scammed and lose everything."

"At least Maddoff wasn't a random nick on the internet connecting through Tor and registering its website through a proxy. You really need to explore a new level of retardness to "invest" in this stuff."

"In the interest of full disclosure, I lost .3btc to this guy, I made the decision to deposit based off having done it twice before without incident and because the developer wasn't hard to get a hold of and was in fact answering my PM's quite timely re-assuring me this is an isolated incident, referencing the times things went down without a skitch. I'm prepared to charge it to the crypto-game, because I know I always should be if I'm willing to partake in something I ultimately have no control over after those funds leave mine."

"With their stupidity and greed ponzi participants are just giving an incentive to scammers to keep scamming, and thus I strongly believe that no pity and no mercy is deserved to those who lose money to these type of blatantly obvious scams."

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

General Prevention Policies

PonziCoin was a literal and honest smart contract ponzi scheme. The rules were straightforward and users came in droves to play. As far as we can tell, no criminal action was taken and users generally appear to have accepted their losses.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.