Couple arrested for alleged bitcoin pyramid scam that amassed PHP900 million

Suspects Leonady and Arnel Ordonio. (Photo from ABS-CBN News)

Our beloved national pastime — the pyramid scam — has gone digital. Yesterday, the Philippine National Police (PNP) announced that they have arrested a couple who are allegedly behind a bitcoin scam that managed to separate about 50 suckers from roughly PHP900 million (approx. US$17 million).

Arnel Ordonio and his wife Leonady Ordonio, owners of a company called NewG, were arrested on April 4 via a sting operation in Vigan City, Ilocos Sur.

So how did they manage to get that much money invested in their bogus scheme?

According to Chief Superintendent Roel Obusan, despite the added attraction of the sexy new world of bitcoin, the basic outline was pretty much a run-of-the-mill pyramid scheme.

“The suspects asked them for capital. There’s an ‘upline’ and ‘downline’ and there’s a promise of a return on investments. In fact, only 16 days… 30 percent (interest). If you have PHP1 million (US$19,244), in 16 days, you’ll have PHP300,000 (US$5,773). At first, they gave it to [the investors]. The first and the second (payment). After that, it stopped. This is a simple case of estafa (fraud) and pyramiding,” he said in Filipino and English.

Maggie Abraham, legal counsel for 20 of the scam’s victims, said the bitcoin investments were made through the financial services platform Coins.ph. She also said that NewG, the suspects’ company, was registered as a computer shop and not as an investment vehicle.

Victim Rotskie Bautista told ABS-CBN News that he and his friends pooled their money so their investment could grow fast. They ultimately ended up investing about PHP15 million (US$288,692), an amount he now realizes he’s not likely to get back.

“It doesn’t seem possible, because it already happened. Even if he goes to jail, we don’t know where to get the money, because we found out that his accounts have been checked and they’re all empty. His properties are now legally attached, as requested by other investors, [and] his vehicles, luxury cars, are also gone,” he said in Filipino.

According to Bautista, he was enticed to invest in NewG because he wanted to get in on the Bitcoin trend without having to do his own trading.

Bitcoins and other cryptocurrencies have gained popularity in the Philippines in recent years. In the first half of last year, bitcoin transactions averaged US$8.8 million per month, a major leap from the monthly average of US$2 million in 2015.

But the crypto market has also been criticized for its unpredictability. Last year, Congressman Ben Evardone, chair of the Banks And Financial Intermediaries committee, advised Filipinos to be wary of virtual currencies, calling them “very risky, speculative and [has] no safeguards.”

The PNP CIDG has filed syndicated estafa charges against Arnel and Leonady. Apart from the couple, more than 20 other “uplines” (i.e. the people who actually got payouts at the beginning) are facing a complaint filed by the PNP Criminal Investigation and Detection Group.

But it’s not just the police they’re worried about. Some of the uplines, who claim they also lost significant amounts, said they have also been receiving death threats from those below them in the pyramid.

“[They threaten me] through text and Facebook comments. I understand what my downlines are going through because I also feel what they’re feeling,” Jhane Reyes to ABS-CBN News.

Just a tip: If it’s too good to be true, it might be best to stay away.

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