Thread by @DoveyWan

Mom-and-pop market, pump-and-dump scheme

There is a major force in Asia crypto market which is largely unknown : “资金盘” - basically big money which is dedicated in ponzi and pump&dump

They largely contributed to the rise of Tron and EOS in China, Cardano in Japan.

Thread 👇🏻

1/ China A shares is highly retail centric, there is good overlap and similarity in trading behavior cross stock market and crypto.

While China’s economy has grown at unprecedented rates, most of the population has been left out of the country’s meteoric rise.

2/ The wealthiest 1% own 1/3 of all wealth, while the poorest 25% own 1%, according to a 2016 survey. Strong gambling/lottery mentality dominates middle class and massive population in rural areas, who have seen the story of super rich but can hardly make it themselves

3/ The eagerness of social mobility and reality of social stagnation leaving these demographic particularly vulnerable to pyramid schemes.

4/ as people are eager to achieve high returns and acquire financial security. Insurance and other financial products are super popular among mom and pops, and on the street are full of “agents” and “prime brokers” selling those products as “wealth management”

5/Most ponzi schemes use technology as a disguise. Cash-back and cryptocurrency are the most commonly used ones. Many P2P lending are ponzis too, among them Ezubao which managed to cheat over 1M investors out of S$7B in just 18 months

6/ Pyramid scams are illegal in China, but often masquerade as legal direct sales organizations (like Avon which recruited individuals as their salesforce). The line between a pure ponzi and a direct sales is blurry and information asymmetry is the key

7/ Many cryptocurrencies' rise in China (e.g. Tron & EOS), are involved in ponzi capital (not sure if it's organized systematically or coincidental). This is a video leaked of a ponzi org educating its members on EOS weibo.com/tv/v/GmSzMnVbp…

8/ Ponzis appeal to retail in a very smiliar way to Bitconnect: magnificent events ( "world blockchain conference" or "global blockchain summit"), a too-good-to-be-true get rich quick scheme, and a "successful investor" showing off their riches like 👇🏻

reddit.com/r/CryptoCurren… assuming most folks can’t read Japanese this is an English discussion of what happens to Cardano in Japan

Japanese crypto player will tell you in detail on how they played out the scheme (but I’m still not sure if it’s done by the team on purpose or not