Crypto platform Rainbow Exchange suspends payments in Argentina amid pyramid scheme claims
Two alleged executives were actually paid actors.
A cryptocurrency platform has suspended the payment or withdrawal of money for thousands of investors in Argentina as it faces allegations it is a pyramid scheme.
The Rainbow Exchange cryptocurrency purchase and sale platform, also known as Knight Consortium, suspended transactions for local users for 14 working days as of last Monday, it confirmed in a statement.
“Due to misleading reports in local media, Argentine regulators have decided to intervene in the investigation of Rainbow Exchange,” said the company’s release.
“In order to ensure the security of funds and fully cooperate with the investigations, we will temporarily suspend withdrawal services for Argentine users and their associated accounts,” it added.
Suspicions of a possible pyramid scheme – a scam in which new investors finance the fake benefits for those already signed up – started to circulate the first days of October, when users of the X social network warned the platform which ensured daily profits of up to two percent in dollars for its thousands of investors in the country.
At the same time, local media disseminated claims that two men, who in September had presented themselves as executives of the company at a conference in Buenos Aires, were in fact two Polish actors hired to impersonate representatives of the company.
The city of San Pedro, some 170 kilometres away from the capital in Buenos Aires Province, is at the centre of the controversy. Its mayor told the local press that between 15,000 and 20,000 of its 70,000 inhabitants had invested money in Rainbow Exchange.
“There has been no report by any local, but given the news in the media about an alleged pyramid scheme, we began an investigation,” said court sources to the La Nación newspaper on Monday.
“Everyone is made to believe that they are buying or selling cryptocurrency and making one-to-two percent in daily profits,” posted programmer Maximiliano Firtman on X, one of the first individuals to highlight the subject.
“It’s all a simulation, but everyone is pleased as punch, believing they are the wolves of Wall Street,” he commented.
In its press release published on Tuesday, the company claimed that, if it cannot continue to operate in the country by a court decision, it will develop “an orderly withdrawal plan to guarantee that all local users can successfully exit the local market."
– TIMES/AFP