Investigating MMM Ponzi scheme on Bitcoin

Cybercriminals exploit cryptocurrencies to carry out illicit activities. In this paper, we focus on Ponzi schemes that operate on Bitcoin and perform an in-depth analysis of MMM, one of the oldest and most popular Ponzi schemes. Based on 423K transactions involving 16K addresses, we show that: (1) Starting Sep 2014, the scheme goes through three phases over three years. At its peak, MMM circulated more than 150M dollars a day, after which it collapsed by the end of Jun 2016. (2) There is a high income inequality between MMM members, with the daily Gini index reaching more than 0.9. The scheme also exhibits a zero-sum investment model, in which one member's loss is another member's gain. The percentage of victims who never made any profit has grown from 0% to 41% in five months, during which the top-earning scammer has made 765K dollars in profit. (3) The scheme has a global reach with 80 different member countries but a highly-asymmetrical flow of money between them. While India and Indonesia have the largest pairwise flow in MMM, members in Indonesia have received 12x more money than they have sent to their counterparts in India

Bitcoin: An Innovative Alternative Digital Currency

Bitcoin is a digital, decentralized, partially anonymous currency, not backed by any government or other legal entity, and not redeemable for gold or other commodity. It relies on peer-to-peer networking and cryptography to maintain its integrity. Compared to most currencies or online payment services, such as PayPal, bitcoins are highly liquid, have low transaction costs, and can be used to make micropayments. This new currency could also hold the key to allowing organizations such as Wikileaks, hated by governments, to receive donations and conduct business anonymously. Although the Bitcoin economy is flourishing, Bitcoin users are anxious about Bitcoin\u27s legal status. This Article examines a few relevant legal issues, such as the recent conviction of the Liberty Dollar creator, the Stamp Payments Act, and the Federal Securities Acts