Yunbi Will Freeze Ethereum Withdrawals Linked to a Pyramid Scheme

Ethereum is once again subject to a significant pump across cryptocurrency exchanges. Some believers refer to this development as a natural price increase, even though it looks like there is a more nefarious reason for the latest action. Ethereum has been linked to a pyramid scheme, according to Chinese exchange Yunbi. A very serious allegation that warrants a further investigation.

Ethereum Demand Driven By A Ponzi Scheme?

Claiming Ethereum is used to fuel a global pyramid scheme is a rather bold statement by the Yunbi exchange. According to an official statement, the company has uncovered a correlation between the recent Ethereum price surge and an undisclosed MLM Ponzi scheme. It was to be expected there had to be some reason for the sudden demand for Ethereum, even though no one expected the situation to be this dire.

For the time being, Yunbi plans to freeze ETH withdrawals to suspicious wallet addresses for up to 30 days. It is unclear if the company has identified the MLM Ponzi wallet addresses in question, or if it will subject all ETH withdrawals to increased scrutiny. One thing is certain, the company has plenty of reason to take a closer look at all Ethereum transactions leaving the platform.

It is true Ethereum’s smart contract technology allows pyramid schemes to operate in a somewhat legal matter. Since everyone can see how much money comes in through the smart contract, people can make an educated guess as to whether or not they will see their money back. Schemes like these exist in a limited capacity, though, and should not be the reason for this action by Yunbi. After all, gambling schemes on a smart contract are not necessarily illegal, although they can be considered to be a gray area.

Unfortunately for Ethereum, it is not the first time this alternative cryptocurrency is linked to Ponzi schemes. There is a Medium post about MMM Global showing an interest in Ethereum, although not much came of it in the end. Additionally, there is the SmartPonzi dApp, as well as the 0% fee Ethereum Ponzi on Bitcointalk. However, up until this point, no exchange found it necessary to halt withdrawals to specific addresses. Considering anyone can change their Ethereum deposit address with ease, it is unclear how Yunbi aims to enforce this new rule moving forward. Going over every ETH withdrawal manually seems to be the only course of action, even though it will be a tedious process.

It remains unclear what this news means for the popularity of Ethereum as a whole, though. With very little information to go by, it is hard to predict what will happen next. It does not appear the MLM involvement will do anything to decrease support for Ethereum anytime soon. At the same time, if such a scheme is responsible for the ETH price surge, it would explain a few things. Then again, the price increase can be a natural evolution as well for all we know.

So far, there is only one MLM that could be responsible for Yunbi’s decision. MLM Gateway is openly advertising Ethereum as the next way to get rich quick. Moreover, the program mentions how users can earn daily profits and even make a return of 15%-25% on their investment portfolio. It appears this “advertisement” is linked to ETHtrade, which is a well-known Ponzi scheme dealing with Ethereum.

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  • Bitfreak

    Another scare tactic by the chinese to bring the Ether value down.. Shows how autocratic the exchanges can be when it comes to making money for themselves.

    • Illyack

      I agree. Bastards.

  • Mc Cande

    Would not surprise me one bit after the DAO fiasco. No matter what, Ethereum has always been fishy.

    • CryptoLife

      IBM, Microsoft and a dozen other Fortune 500 companies (banks) would disagree with you!!!

  • Adrian

    So someone used ethereum smart contracts and did something probably illegal. I don’t see why this would be ethereum’s problem. Guns aren’t used for self defense only, nor money, nor a pie, you can suffocate someone with it. Should we not use anything anymore because someone used something for bad things ?

    • Spike Spiegel

      so someone used ethereum properly to take money from dao, why should ethereum steal money from people it finds “probably illegal”? but they did, and now all eth supporters are nothing but scammers and frausters who steal money, censor tranasctions, use blacklists, stop apps.

  • Steve Lobs

    Ethereum’s technology is already surpassed BTC. BTC developers did not have enough foresight to further develop past the original concept. Now the community is split and Ethereum is the clear alternate. BTC investors are diversifying their investments now to Ethereum. Ethereum is the next evolution in blockchain technology. Those that thought BTC was it were and sadly mistaken. Ethereum has more active and qualified developers than BTC . It’s here, get on board.

    • Spike Spiegel

      And many alt coins tech surpasses ethereums, without reversed transactions, stopped apps, censored transactions, uncontrollable forks and downtime, lack of consensus, jihad like morality police dictating who is allowed to have money and who’s not on ethereum

      • Steve Lobs

        But isn’t reversing fraudulent transaction the moral thing to do? I think it is. This is why the technology is feasible to use. When someone steals your credit card information and runs up debt, you get it back, right? To me it makes perfect sense. I have been following BTC since it’s concept, to me Ethereum has properties that are most useful in real world application. But I do agree with you about other crypto tech. The problem is that there are not a lot of developers that have the experience or knowledge to support the infrastructure.

  • Paul

    Thus is just FUD and has nothing to do with Ethereum. Bad reporting as well. They should track human traffickers using bitcoin and block those accounts.

    Ethereum fundamentals and platform promise is the reason. People recognize this and new funds are moving in to bet on its success. Big threat to large bitcoin holders no doubt.

  • Bob Johnes

    lol this is hilarious. as if Yunbi will be able to affect the price of ethereum after the EEA backing and white papers released. Several platforms are already being built on ethereum. Sure, the current price might be rising too fast for comfort, but there are real fundamentals there. The crypto currency world is so funny sometimes.