About a third of the population of San Pedro, a city 170 km from Buenos Aires, may be victims of an alleged cryptocurrency pyramid scheme. They invested in an exchange that promised earnings of around 1% per day in dollars.

It is estimated that approximately 20 thousand city residents will participate in the scheme.

Possible crypto pyramid scheme promised daily payments

According to the newspaper La Nacion, San Pedro has 70,000 inhabitants. Of these, around 20,000 invested in the Rainbow Exchange trading platform.

An anonymous source told the newspaper that the platform promised daily payments of 1% in dollars. That was enough to convince some people to invest their savings in the platform. “[They] withdrew credits, sold cars and everything they could to invest the money,” said the source, who decided not to reveal his name for fear of death threats.

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“But when everyone enters, there is no problem. The problem is when everyone wants to withdraw at the same time,” he adds.

The procedure is classic for a crypto pyramid scheme. In it, investments from new investors are used to pay older investors who want to withdraw.

The problem occurs when withdrawal requests exceed the available funds, which forces the scheme to stop paying. This then creates a cascade effect where more investors want to withdraw, increasing panic.

The source explains that a good portion of the population understood that this was a crypto pyramid scheme, but not everyone agrees. “There are a lot of people confused, most think it is a new way to make money,” he adds.

Knowledge of the scheme has already reached authorities. San Pedro Mayor Cecilio Salazar spoke about the app to local media. However, he declined to call Rainbow Exchange a scam.

In short, he stated that there are no complaints about this yet. Therefore, there is no ongoing investigation.

Scam uses suspicious app

To make investments, victims must first download the app's APK file. However, this program is not available in app stores, which makes it even more suspicious.

Some of the investors are dedicated to convincing more people to participate through a referral feature that promises to pay commissions.

In addition, every day, the victims participate in a live broadcast with a woman named “La China”, in which she gives supposed tips on cryptocurrency purchases that always result in profits on the platform. These broadcasts take place around 9 pm every day.

Argentine developer Maximiliano Firtman spoke on his X profile (formerly Twitter) about Rainbow Exchange. “They make people believe that everyone is buying or selling a cryptocurrency and earning between 1% and 2% daily. But all cryptocurrencies are non-existent. It’s all a simulation and people think they are Wolves of Wall Street,” he said.

Another Argentine newspaper, Clarín, investigated the exchange and found that it used paid actors to pose as its owners at public events to promote the crypto pyramid scheme.

Something similar happened in the USA, when, in August 2023, Uruguayan actor Nestor Nuñes was arrested for impersonating the CEO of Forcout, a company owned by the Bitcoin Sheikh.

In Brazil, there is a CNPJ associated with Rainbow Exchange Inc that is suspended. The company would be domiciled abroad and would act as a holding company for non-financial institutions.

The article Crypto scam hits 20,000 inhabitants of city in Argentina was first seen on BeInCrypto Brazil.