The MNB warned against the spread of pyramid schemes, which are organised on the Internet and take advantage of the popularity of virtual devices that can be used for payment. Trading in these assets and the organising institutions are not supervised by the central bank, and if the organiser becomes insolvent, they are not covered by the indemnification of domestic guarantee funds.
Taking advantage of the growing popularity of pay to play virtual devices, low returns on traditional investments and a lack of consumer awareness, a number of products which look similar to pyramid schemes have appeared on the market.
Some constructions and trading platforms theoretically allow prospective investors to invest in and trade in a new virtual tool similar to bitcoin. In reality, however, the authority to issue the virtual device is reserved to the organiser of the pyramid scheme with exclusive authority, and trading is only possible on a closed “stock exchange” operated by the issuer.
With the promise of high returns to the system, new entrants are organised online, and early entrants receive commissions from the payments of later entrants, so that the commission rate can be increased with additional deposits.
Investing in such assets involves a special risk, as these assets, which are not part of the regulatory framework, are typically issued by foreign companies and individuals outside the jurisdiction of the MNB and the supervisory institutions of the EU. In the event of the insolvency of the organiser, consumers will not be compensated by anyone, and investments will not be provided by either the National Deposit Insurance Fund or the Investor Protection Fund.