What happened to Paycoin: Classic cryptocurrency of the Wild West
The rise and fall of the Paycoin
Over the past 10 years, the cryptocurrency market has changed beyond recognition. While today it is led by widely known and reputable digital assets, in the past, even the top five coins could include dubious projects. One of them was Paycoin.
Although the word “Bitcoin” is now known worldwide, the cryptocurrency market is still relatively young. Just 10 years ago, the industry was in its infancy and resembled the Wild West more than a traditional financial sector.
In 2015, the market was filled with a wide variety of projects, most of which promised sky-high returns and claimed to be “better than Bitcoin.” Many of these coins had either outright fraudulent characteristics or bore a strong resemblance to financial pyramids.
Renowned crypto analyst Willy Woo, recalling that era, notes that if you look at the cryptocurrency rankings in early 2015, apart from Bitcoin, you’ll hardly recognize any other names. Most were created with a single goal — to raise as much money as possible from gullible investors and disappear.
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What Is Paycoin
In the ranking published by Willy Woo, one coin stands out — Paycoin (XPY). At the time, it was well known and ranked among the top five digital assets. But where did it come from, and why did it become so popular?
Paycoin was launched in December 2014 and was introduced as one of the most ambitious projects of its time. The cryptocurrency was developed by a company called Gaw Miners, led by its founder and public face, Josh Garza. The project aimed to become a payment solution that could compete with Bitcoin, offering faster transactions and a built-in trust system.
Paycoin’s popularity surged due to bold developer promises and a powerful marketing campaign. A key promotional feature was the idea of a guaranteed minimum price of $20 per coin, which fueled excitement among retail investors.
The Paycoin ecosystem included several related projects, the most notable of which was the payment platform and exchange PayBase. It was designed to store, buy, and sell Paycoin. The developers also promised to launch an online store and integrate the system with major retailers.
Why Paycoin failed
As you might have guessed, Paycoin turned out to be a Ponzi scheme disguised as an innovative crypto ecosystem. Problems began early in 2015. Users started reporting frozen funds, sudden account suspensions, and a lack of communication from founder Josh Garza.
Many quickly suspected an exit scam and contacted authorities. The U.S. Securities and Exchange Commission (SEC) launched an investigation, accusing the businessman of selling unregistered securities and deceiving investors.
In April 2015, the PayBase exchange shut down. Prior to that, it became clear that most of the project's promises were false — including a claim of a partnership with Amazon, which the company promptly denied.
By then, Paycoin had lost nearly all its value, and investor trust was irreparably damaged. The cryptocurrency was soon subject to regulatory sanctions, and exchanges began mass delistings due to high risk and legal concerns.
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The story ended in prison: in 2018, Josh Garza was sentenced to 21 months for fraud. The court ruled that Paycoin and its related companies were a pyramid scheme. More than 10,000 investors were affected after purchasing so-called “hashlets” — essentially fake shares in nonexistent mining operations. As a result, the SEC secured tens of millions of dollars in restitution from the companies.
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What lesson can we learn
The story of Paycoin is a textbook example of how quickly a cryptocurrency built on promises rather than real value can rise — and fall even faster. The project shot into the top five digital assets, won the trust of thousands of investors, and turned out to be nothing more than a well-packaged Ponzi scheme. The outcome was predictable: investigations, criminal charges, and prison time.
Today, Paycoin is a ghost from the past. Its price is fractions of a cent and shows no signs of life. Once branded a “Bitcoin competitor,” the coin now serves as a cautionary tale for newcomers: flashy presentations and bold promises are no guarantee of a project’s sustainability or legitimacy. The case of Paycoin remains one of the most instructive stories of the cryptocurrency Wild West era.
