Multi-level marketing (MLM) Meaning

Multi-level marketing (MLM) is a business strategy where participants earn income not only from selling a product but also from recruiting new salespeople into their "downline." In the cryptocurrency world, MLM structures are extremely controversial and often synonymous with Ponzi Schemes or Pyramid Schemes. While legitimate MLMs exist in the traditional world (like Amway), crypto MLMs (such as BitConnect or Forsage) typically have no real product.

They rely entirely on new investor money to pay returns to earlier investors. They use complex "Referral Programs" and "Tiered Commission Structures" to incentivize users to aggressively recruit their friends and family on social media.

Regulatory bodies like the SEC aggressively target these schemes.

The danger for new investors is that these projects are often disguised as "DeFi Protocols" or "High-Yield Investment Programs." The collapse of these schemes usually results in a total loss of funds for the vast majority of participants-specifically, everyone at the bottom of the pyramid who joined just before the recruitment dried up.