In a crypto winter, the consequences could be painful for investors.

When Charles Ponzi was arrested 105 years ago, he had just raised as much as $20 million in seven months. Thousands of Americans had fallen for his scam investment scheme that promised to double their money in 90 days. His downfall became synonymous with fraudulent financial structures built not on genuine productivity but on endlessly recruiting new believers.

Fast forward to August 2025, and financial historians may be wondering whether the latest trend in cryptocurrency — so-called bitcoin treasury companies — carries echoes of that infamous fraudster’s legacy.

These firms are not exchanges, nor miners, nor payment innovators. They are corporations whose primary, and sometimes sole, business activity is raising capital through debt and equity in order to buy bitcoin and hold it as their main asset. Their pitch to investors? That by tying their fortunes to the world’s largest cryptocurrency, they are offering exposure to an appreciating digital gold without the headaches of wallets, private keys, or direct crypto ownership.

Depending on perspective, this is either genius financial engineering or something closer to a Ponzi scheme layered upon another Ponzi scheme. The parallel may not be perfect: unlike Ponzi’s scam, bitcoin itself is not inherently fraudulent, nor does it explicitly depend on new money to pay old investors. But the resemblance lies in the cult-like optimism, the reliance on ever-rising prices, and the belief that speculative assets can serve as a sound financial bedrock.

Over the past year, bitcoin has surged more than 80 percent, vastly outpacing the tech-heavy Nasdaq index. This has emboldened bitcoin treasury companies, whose market valuations have soared in tandem with the crypto bull run. Some now borrow billions at high yields to accumulate more coins, promising shareholders that such leverage will multiply returns. For those who remember the dotcom bubble or the 2008 mortgage-backed securities mania, the script feels eerily familiar.

The core risk is structural. Unlike traditional companies that generate revenue from goods or services, bitcoin treasury companies rely almost entirely on the appreciation of a volatile asset. If bitcoin’s price collapses, so too do their balance sheets. In a crypto winter, these firms face a lethal squeeze: mounting debt obligations on one side, evaporating asset values on the other. For investors, the ride down could be brutal.

To critics, the problem is not just financial engineering but also psychology. Bitcoin has long inspired a quasi-religious fervor among its devotees. The narrative that it will liberate society from corruptible fiat currencies, or shield individuals from inflationary governments, carries powerful emotional weight. Treasury companies exploit this conviction, presenting themselves as vehicles of financial revolution rather than speculative bets. “It’s the financialization of faith,” says one Wall Street analyst. “People are buying not just exposure to bitcoin, but a dream.”

The comparison to Ponzi’s scheme is particularly tempting because of the feedback loop these companies create. By raising money to buy bitcoin, they push up the price of bitcoin, which in turn makes their own balance sheets look healthier, which then attracts more investors and lenders willing to supply fresh capital. This self-reinforcing cycle can look like financial genius in a bull market — but in a downturn, the spiral runs in reverse.

Regulators are starting to take notice. In Washington, congressional hearings this summer questioned whether bitcoin treasury companies represent a systemic risk if their debt obligations entangle mainstream banks and pension funds. The Securities and Exchange Commission has hinted at new disclosure rules, particularly around the leverage these firms deploy. In Europe, regulators are pressing for stress tests to simulate what would happen if bitcoin lost half its value in a matter of months.

The companies, unsurprisingly, push back. Executives argue that they are offering investors legitimate exposure to one of the best-performing assets of the decade. They liken their approach to gold trusts, which pool investor money to hold bullion without generating revenue themselves. “No one accuses a gold ETF of being a Ponzi scheme,” one chief executive insisted at a recent industry conference. “Bitcoin is the future reserve asset, and we are simply ahead of the curve.”

Yet there is a crucial difference. Gold has thousands of years of history as a store of value, relatively stable price dynamics, and limited volatility. Bitcoin, despite 16 years of existence, remains prone to wild swings of 20 percent in a single week. For leveraged treasury firms, those swings can mean the difference between solvency and collapse.

The broader concern is contagion. If bitcoin treasury companies grow large enough, their implosion could ripple into the wider financial system. Creditors left holding junk debt, retail investors nursing massive losses, and shaken confidence in capital markets could all amplify the fallout. Some analysts warn that this cycle could mirror the cascading effects of subprime mortgages in 2008 — niche instruments that proved devastating when markets turned sour.

Still, optimism persists. For every skeptic invoking Ponzi, there are investors who see bitcoin as a paradigm shift too significant to ignore. In their view, treasury companies are not frauds but pioneers, betting boldly on a monetary revolution. History, of course, will render the final verdict.

For now, though, it may be worth recalling the lesson of Charles Ponzi: when returns look miraculous, and the mechanism for generating them is little more than repackaged belief, caution is not cynicism — it is prudence. The advent of bitcoin treasury companies may be hailed as financial innovation today, but if the crypto winter deepens, tomorrow’s headlines could read like déjà vu.