Most Cryptocurrency, Technically A Ponzi Scheme

BY SRH

Every cryptocurrency is a Ponzi scheme, but the naive investors can only see the enormous profits made by the other victims, so the cycle continues until every crypto system falls.

Most cryptocurrency is technically a Ponzi scheme. A Ponzi scheme is fraud in which earlier investors are paid with money from newer investors, while returns are falsely presented as coming from legitimate earnings. Some crypto projects and platforms have used that model, but cryptocurrency itself is a broad category of assets and technologies; many coins rise or fall in value without an organizer paying investors from new deposits. That doesn’t make them safe or valuable—crypto can still be highly speculative, volatile, or fraudulent.

The San Francisco-based company endured a net loss of $666.7 million, or $2.49 per share, during the quarter ending Dec. 31, 2025. LSEG data shows many analysts estimate a profit of 55 cents per share.

Investor divestment from spot bitcoin exchange-traded funds (ETFs), which drove much of the rally in 2025, helped to fuel the decline.

U.S. spot bitcoin ETFs demonstrated net withdrawals of $7 billion in November 2025, $2 billion in December 2025, and more than $3 billion in January.

Coinbase’s transaction revenue plummeted to $982.7 million from $1.56 billion a year prior, largely due to the more than 45 percent drop in consumer transaction revenue. The company’s shares climbed 1.2 percent in volatile after-hours trading. They are down nearly 40 percent for the year.

Offsetting some of the pain, subscription and services revenue grew 13.5 percent to $727.4 million, driven by expansion in stablecoin operations. Stablecoin revenue surged to $364.1 million from $225.9 million.

Stablecoins, digital tokens representing traditional assets such as the U.S. dollar or government debt, have been hyped as a modern rail for traditional finance. Coinbase earns revenue from USDC, a stablecoin issued in partnership with New York-based payments technology company Circle. USDC generates interest on the underlying U.S. dollar reserves.