https://www.pyramidschemealert.org/crypto-and-prediction-markets-legacy-of-mlm/
by Robert L. FitzPatrick
Remembering
I am one of the few people in the world that for more than 30 years consistently examined and sought to expose the lie that is called “multi-level marketing” (MLM). I am not alone, but part of a tiny cadre of truth-tellers, nearly all of whom have been sued and slandered for publishing findings that validate what is actually plain and obvious.
With numbing repetition, year after year, I witnessed and heard the maddening stories of MLM abuse and tragic consequences — divorces, ruined relationships, interrupted education, bankruptcies, crippling debt, lost years in mental captivity, even suicides. My research of more MLMs, as they exploded in number, only further confirmed the grim truths:
All MLMs are essentially identical; all produce the same virtual 100% loss rates; the claim of “direct selling” is an absurd disguise; MLM products are theatrical props of an elaborate pyramid scheme as are the names, titles and terms of “business” that it employs. No one earns net profit from MLM “retailing” (direct selling); all MLMs use the same methods to defraud, delude and mentally enslave. The fraudulence is inherent. MLM cannot be “regulated.”
Along the way, I abandoned expectations about business, government, law and academia and got used to disappointment. I wrote and personally met with staff and members of Congress, with no response; witnessed FTC officials taking high-paying jobs with MLMs; saw university professors in court taking large fees to swear MLM is a “business opportunity.” I assisted countless journalists who went on to produce “both sides” narratives, citing false data, without fact-checking, provided to them by MLM, and identifying me as a “critic.” The premise that MLM is “legitimate direct selling” was journalistically accepted without knowledge or challenge. Some reporters told me their editors would never allow MLM’s “legitimacy” to be put in question as a story focus.
Foreseeing
Over these years, I had one more response to what I witnessed that was of much greater significance. I had a foreboding sense that MLM, the largest cult and organized financial fraud in American history, was laying a foundation for even larger and more destructive scams and financial delusion. That fearsome intuition proved to be prophetic.
Since 2008, MLM has spawned at least two other gigantic, delusional scams that are running rampant in America and, like MLM, spreading globally. Their negative social impact accelerates the erosion that MLM has inflicted for decades on societal foundations. In total dollars and numbers of followers they are already far larger than MLM. Their impact on the national economy is more ominous. MLM harms millions, especially those financially struggling, but its position in the larger economy is marginal. The newly spawned scams inflict heavy damage at lower ranks of income, but one also holds potential to bring the entire US economy down.
The two delusional scams are Crypto Currency, e.g., Bitcoin, and Prediction Markets, e.g., Polymarket. Like “multi-level marketing”, they are identified by names that hide their realities. MLM is not “multi-level.” The recruiting chain is “endless.” MLM is not “marketing”, just internal purchasing and financial recruiting. Crypto is not a functioning “currency” except to launder or hide financial transactions, especially across national borders. Its predominant role is that of an imaginary commodity with no backing, no inherent value and no practical usefulness to the general public beyond Ponzi trading. The value of its “tokens” and “coins”, like an MLM “distributorship,” depends on belief and future purchasing by more believers. Last-ones-in always lose and are always the vast majority.
Prediction Markets, where people can place wagers with advertised “odds” on virtually any aspect of daily or public life, sporting events, and national news, do not “predict” and are not “markets.” They are a corrupted and unregulated form of gambling that allows those to bet who already know the outcome. “Odds” are subject to untraceable, insider manipulation.
As MLM pretends to be “direct selling”, Prediction Markets pretend to be “futures investments” and “derivatives.” As MLM commercializes all personal relationships, Prediction Markets seek to “financialize” every aspect daily life, personal, political, leisure, and economic. Like MLM, Crypto and Prediction Markets promise financial rescue for those getting crushed in the current economy. Both falsely present manipulated money transfers, in the same way MLM does, as sustainable economics for the masses. Also like MLM, they are impossible to comprehend.
Pseudo-Economics, Federally Protected
Notably, like MLM, Crypto and Prediction Markets have gained federally-protected status based on their false identities, effectively immunizing them from lawsuits and law enforcement or even objective scrutiny. As MLM was granted status of “direct selling,” its pyramid structure, absence of retailing, and virtually total loss rates for participants—that is, what MLM is and what MLM does— are not examined. Consequences to victims are attributed to the “market” or lack of effort by the “losers.” Induced purchases by recruits are redefined as “retail sales.” Deceptively luring people to invest in an “endless chain”, where they inevitably “fail”, and deceptive promises about non-existent income and withheld information about costs are redefined as “trade practices” and placed under the protection of the Federal Trade Commission (FTC).
Prediction Market gambling is granted immunity from state gambling laws by being placed under the federal jurisdiction of the Commodity Futures Trading Commission (CFTC), which redefines the wagers as “derivatives.” Crypto remains in a regulatory limbo, sometimes defined as “commodities” and at other times “securities.” As rival regulatory agencies—SEC and CFTC—farcically debate Crypto’s “classification”, what Crypto actually is, how it functions, and its real-time risks and inevitable consequences are ignored or obscured.
In the last five years, the total “value” of Crypto rose to an astounding $4.2 trillion but more recently “plunged” to its current “valuation” of approximately $2.62 trillion. Why did it sink? Where did $1.5 trillion go? What was the earlier valuation of more than $4 trillion based upon? If purchasing slows or stops, what sustains Crypto’s “value”? How much of the “value” is based on leveraged purchases using borrowed funds? What are the risks to the banks that make Crypto loans? Those questions are not addressed.
To obtain their imaginary status as derivatives, commodities and securities — granting them effective immunity from oversight, law enforcement or common sense analysis — the Crypto and Prediction Markets were able to seamlessly plug into the channels of government corruption, media complicity and pseudo-economics built up over decades by MLM which normalized pyramid schemes and distorted the perceptions of tens of millions.
Same Old Profiteers and Endorsers
As MLM demonstrates, gaining immunity from regulation and law enforcement leads directly to government leaders brazenly profiteering while also suppressing regulation or law enforcement. The Trump administration is not the first or the only but clearly at the pinnacle of government complicity leading from MLM to Crypto and Prediction Markets. Donald Trump himself was the longest-term and highest-paid endorser of MLM, receiving millions for telling his followers that MLM is a reliable pathway to prosperity. He helped found a new MLM with his own name on it. It soon went bankrupt, leaving tens of thousands of believers in confusion and loss. Many of his cabinet members—Amway’s Betsy Devos at the top of the list—have been MLM profiteers, perpetrators and promoters. Now, Trump’s son and wife are running Crypto schemes and others in the Trump Administration are accused of making Prediction Market “investments” on the timing of events and outcomes they have unique, insider information about. Bill Clinton, who infamously received a “speaking fee” of $700,000 to address an Amway event, is now reportedly collecting similar-sized fees for selling his name and public trust at Crypto conferences.
Big Lies Lead to Bigger Lies
My haunting fear that MLM was a precursor to larger delusional frauds was based on an astonishing reality that I was witnessing. Despite MLM’s fully documented harm to millions, absence of profitable retailing, and obvious “endless chain” design, the truth of MLM remained forcefully denied or suppressed. The Big Lie—that MLM is a modern from of “direct selling” and an “extraordinary income opportunity”—prevailed, as it does today. Fraud is “business.” Pyramid schemes are “sales.” Loss is “opportunity.” George Orwell would have understood.
Claiming to be “perfectly legal” and promising “extraordinary opportunity” MLM penetrated almost every American household and spread to more than 100 countries, teaching and advocating the scam system of pyramid recruiting, all under the protection of the US government. On that perverse foundation many new forms of mass-based fraud and folly could develop, using their own false identities, obtaining corrupt government endorsement, and expanding the revolving-door traffic MLM had built up between regulators and mega-scammers.
How could this happen?
What Dare Not Be Said — Shades of Epstein
Eventually, I recognized that there was something else protecting MLM as much or more than MLM’s false identity, Big Lie, and corruption of government. As in the Jeffrey Epstein pedophile/spy/blackmail/financial scandal, the naked truth of the MLM cult/fraud, at a certain point, became too disrupting and incriminating to be admitted. The Epstein scandal has revealed the reality of massive law enforcement failure and broad institutional coverup in a way few could have believed before.
Exposure or even admission of the truth of MLM indicts powerful politicians of both political parties, famous business leaders, celebrities, church leaders, Wall Street gurus, and trusted government officials, all of whom are exposed to claims to restitution, accountability, or criminal prosecution. The mainstream media is indictable for its failure or refusal to investigate and report the tragic and documented experience of tens of millions of MLM victims.
Also like Epstein’s house of horror, MLM’s tentacles spread its ill-gotten money into state legislatures, universities and non-profits, gaining complicity from state AGs, academics and “consumer protection” groups.
Sinister Silence
Reflecting the sinister silence of victims and accomplices that protected Epstein for years (and still do), many “anti-MLM” figures, even after suffering debilitating losses and humiliation, do not say out loud the terrible truth of MLM fraud and cult. They go along with the FTC-endorsed disguise of “direct selling” and “business” identity. Publicly acknowledging that MLM is not business but an orchestrated scam operating in plain sight opens a door to realities of corruption, negligence, and coverup they seemingly prefer to deny, and to personal consequences, real and imagined, they dare not test.
Prior to Epstein, explanations of MLM’s widespread cover-up, affecting media, law enforcement, academia, Wall Street, and Congress, and with the power to silence and intimidate millions of victims were treated as a “conspiracy theory” or the ravings of those with a grudge or some nefarious motive. Now unspeakable wrongdoing in high places, institutional coverup, and fearsome walls of silence are being understood as all too real.
Unlikely Truth-Tellers
It took years of struggle and persistence, but now websites, podcasts, comedians, films, books (a few), and tragic testimonials of MLM victims are widely accessible. The coercive persuasion methods of MLM are examined and the label of “cult” is openly applied. An underground network of truth-telling developed even as the Big Lie continues to be presented as official “truth” by the FTC, mainstream media, and academia and while risk of lawsuits or government prosecution still looms.
Following the same path, truth-telling about Crypto and Prediction Markets is advancing, led by a small number of independent, non-institutional, and sometimes unlikely figures. Their courageous work is beginning to gain wide exposure.
On the Crypto front, the unlikely truth-teller is the famous actor, Ben McKenzie, who explains to interviewers that he took on Crypto because, in so many words, somebody needs to do it, and no one else has — an expression heard from many MLM whistle-blowers. In 2023 McKenzie authored a best-selling book on Crypto with investigative journalist, Jacob Silverman, entitled, Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud.
Building upon the book’s research, McKenzie has now produced a documentary, entitled, Everyone Is Lying to You for Money. A consumer newsletter is also offered that may be the basis for continued activism. The film is described as “knife sharp and impeccably researched.” A recent review of the film begins with a statement that would perfectly apply to an MLM exposé: Why is Crypto so confusing? Because it’s all designed to sell an illusion.
The review explains that cryptocurrency is meant to seem “heady and new”, yet also “just out of reach”, which is its “secret appeal” that “makes its true believers into something of a cult.”
Perhaps due to the obvious reality that it is plain old gambling, with well known consequences of addiction, loss, disruption and delusion, Prediction Markets are being debunked and decried by more truth-tellers. But it is has already secured government protection and, absurdly, the pseudo-economic identity as “investments” in “futures.” Even beyond a fake identity, Prediction Markets have sought to take old-fashioned betting into realms beyond random chance. Taking wagers on future events in which many people have ready access to information about the outcome and timing, scheme operators claim insider-trading is factored into the “odds” with AI algorithms!
Common sense analysis of Prediction Markets and the harm it poses is now available on YouTube, such as a recent investigation of “prediction markets” by John Oliver or this 20-minute documentary from More Perfect Union.0
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