The Moneyist: My father coerced me into giving $100K to a ‘lucrative’ cryptocurrency pyramid scheme. I’m suspicious about how it works

Dear Quentin,

My father recently joined a cryptocurrency MLM (multi-level marketing) and recruited me into this lucrative scheme, where I ultimately invested $100,000. How it works is that the person who recruits you gets 20% of the profits you earn, then 15%, 10%, 5% and so forth. 

There’s three of us kids and our mother. The problem is that he structured the account rewards in a way that he, mom and my two siblings reap the 20%, 15%, 10%, 5% and so forth — yet I’m the one who financed everything. I feel that it’s unfair the way he set it up, and would have preferred my children to be downstream to my account so they can get those benefits. To give you an estimate, a 20% account earns $100 per day for about two years. 

I must admit I didn’t realize that’s how the MLM worked, or that I was even joining an MLM. That’s not how he phrased it when he coerced and highly encouraged me to put in this amount. I simply trusted my father to act in my best interests. He chose to keep several aspects of this investment opportunity secret because he must have known I would have rather put my husband and kids first. 

What hurts is that out of all of my siblings, I have helped my parents out in many ways. I have been generous with my time and money, yet this is the way I’m being repaid. I have told them to refund those “rewards” and now no one’s talking to me or my family, and they’re demanding an apology for my being greedy to ask for that money. 

He says I should be grateful that he signed me into this program. A few choice words have been exchanged, and now there are hurt feelings all around. Was I petty for being annoyed at this? Please help us find the peace and laughter that was always present in our home. 

Distraught Daughter

You can email The Moneyist with any financial and ethical questions related to coronavirus at, and follow Quentin Fottrell on Twitter.

Dear Distraught,

One man’s investing club is another man’s Ponzi scheme.

Your family members have gone cryptocurrency-gambling crazy, and they have done it with other people’s money. Your money, to be precise. Never hand over money to a friend or family member without getting the transaction in writing, and never give up agency over your own finances, especially for such a risky proposition.

This $100,000 may or may not disappear. But the chances of that happening increase as you go up the chain and the multi-level marketing scheme becomes more opaque. This, however, is a pyramid scheme that is dependent on other people joining, with each person skimming from the profits of those below them.

Your father used his leverage in the family to shake you down, but you willingly handed it over. It’s a hard lesson. Ask him how much your original investment is worth, and ask for it back. If he refuses? It was neither a gift nor a loan. You gave it to him to invest on your behalf — in a saturated market that has wild fluctuations.

Multi-level marketing schemes are risky when you are selling a product, but this is a highly volatile asset. According to the Federal Trade Commission, “If the MLM is not a pyramid scheme, it will pay you based on your sales to retail customers, without having to recruit new distributors.” Alas, that is not the case here. 

Now, a warning: “Most people who join legitimate MLMs make little or no money,” the FTC adds. “Some of them lose money. In some cases, people believe they’ve joined a legitimate MLM, but it turns out to be an illegal pyramid scheme that steals everything they invest and leaves them deeply in debt.”

While some multi-level marketing schemes are completely legitimate, Bryan Hochstein, an assistant professor of marketing at the Culverhouse College of Business at the University of Alabama, says that in most cases, pyramid schemes play upon most people’s desire to ‘get rich quick,’ ‘get in on a good deal,’ ‘make it.’” 

Meanwhile, U.S. consumers have reported losing over $80 million to cryptocurrency investment scams in the seven months from October 2020 to May 2021, a more than tenfold increase on the same period a year earlier, according to data released by the Federal Trade Commission. That involved 7,000 customers, and the median amount lost was $1,900.

You’re not the only one to hand over thousands in a crypto pyramid scheme, and you won’t be the last. “If it seems too good to be true, it usually is, so investigate any opportunity to make sure it is a good deal and one that you can honestly describe to a family member or friend as being worth the price and a good value,” Hochstein added.

Your father did not do that, and you did not do your own due diligence. The question for you is why. The prospect of “easy” money can be exhilarating and exciting, but you both bear the responsibility for this Wild West investment, particularly as it is based on encouraging other gullible and vulnerable people to do the same.

By emailing your questions, you agree to having them published anonymously on MarketWatch. 
By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

The Moneyist regrets he cannot reply to questions individually.

More from Quentin Fottrell:

‘I just don’t trust my sister’: How do I gift money to my nieces without their mother having access to it?
We’re getting married and have a baby on the way. My wife has offered to pay off my $10,000 student debt and $7,500 car loan
I have three children. I quitclaimed my house to my most responsible son. Now he has blocked my calls
My brother-in-law died, leaving his house in a mess. His landlord wants me to repaint and replace the carpet. What should we do?

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