Dagcoin and DAG-Chain: Claims, Warnings and the Fraud Case

Note (September 2026): This article originally repeated Dagcoin’s marketing claims as fact. Central banks in Jordan and Oman have warned about dagcoin, and in October 2022 Estonian police detained people linked to its creation on suspicion of investment fraud involving nearly €8 million, so the text has been corrected.

Dagcoin is a cryptocurrency created in 2018 and marketed as a blockchain replacement running on a “DAG-chain” (a directed acyclic graph). Its claims were never independently verified. Central banks in Jordan and Oman warned about it, Bermuda police called its marketing arm Success Factory a likely pyramid scheme, and Estonian police detained people linked to its creation in 2022 over suspected fraud of nearly €8 million.

Key Takeaways

• A directed acyclic graph (DAG) is a real data structure, and legitimate networks such as IOTA, Nano and Hedera use DAG designs. The technology is not the problem.
• Dagcoin’s promises, including a fixed fee of 0.0005 US dollars and a network that gets faster as users grow, came from the company and were never independently verified.
• The Central Bank of Jordan (2019) and the Central Bank of Oman (October 2020) singled out dagcoin in public warnings.
• Estonian police said in October 2022 that four men were suspected of artificially inflating dagcoin’s price and user numbers, with losses of nearly €8 million.
• DAG-chain did not make blockchain obsolete: Bitcoin still runs on proof-of-work mining, and Ethereum moved to proof of stake in September 2022.

The words ‘Cryptocurrency’ and ‘Blockchain’ have, almost, become synonymous with each other. Nobody can talk about cryptocurrency without referring to blockchain and vice-versa. This situation can be easily compared to an administrative system of a country which is running since long.

Now, certain issues do exist in each and every political system for which there is a strong resentment among the common folks.

Same way, the users of blockchain based cryptocurrencies are annoyed of the phenomena of rising transaction costs and a massive increase in transaction confirmation timings which is not ready to leave blockchain at all.

Developers are, indeed, sorting out things by placing alterations, additions and code fixes in the blockchain but the situation is far from improving.

Here comes into action a totally new type of cryptocurrency termed as ‘Dagcoin’ which doesn’t require blockchain at all. Instead, Dagcoin was presented as running on a directed acyclic graph (DAG), which its promoters branded “DAG-chain”. Estonian police later stated that the four men behind dagcoin created it in spring 2018 and sold it through multi-level marketing.

Just like a revolution or an uprising is meant to change the political system of a country, Dagcoin and DAG-chain were promoted as having the potential to render blockchain obsolete and change the cryptocurrency sector completely. That did not happen, and regulators and police have since issued warnings about dagcoin (see below).

Now, the question that comes up is how Dagcoin and DAG-chain can do that? Why are they being termed as two entities that are supposed to bring in a revolution in the global cryptocurrency sector? We are going to attempt to answer such questions in this post.

Dagcoin & DAG-chain were claimed to solve the two major problems faced by blockchain

Dagcoin’s promoters claimed that Dagcoin and DAG-chain had already solved the two major problems of transaction costs and transaction confirmation time faced by blockchain. Those claims were never independently verified, and Estonian prosecutors later alleged that dagcoin’s price and number of users had been artificially inflated.

DAG-based ledgers are a genuine branch of cryptocurrency design, used by projects such as IOTA, Nano and Hedera, but none of them has made blockchains meaningless.

Problem 1: Rising Transaction Confirmation Time

An external miner plays a significant role in confirming a cryptocurrency transaction done over the blockchain as the miners are responsible for sharing the processing power of their systems in order to confirm the transaction. Proof-of-work blockchains such as Bitcoin require a large amount of energy for this. Not every blockchain works this way: Ethereum switched from proof of work to proof of stake on 15 September 2022, which cut its energy use by over 99%.

Moreover, as the number of users increases, so is the pressure and the requirement of energy to confirm multiple transactions happening each second. As a result, confirmation on a busy proof-of-work blockchain can be slow. Bitcoin adds a new block about every 10 minutes on average, and its fees depend on the size of the transaction in bytes, so fees rise when block space is in demand.

DAG-chain completely removes the need of an external miner. In the case of DAG-chain, a transaction is confirmed by the transaction done prior to it and the chain continues. Dagcoin’s marketing claimed that a dagcoin transaction would be confirmed within a few minutes. Confirmation times differ widely between DAG networks (Nano, for example, describes confirmation in under one second), and no independent measurement of Dagcoin’s network was found.

Moreover, DAG-chain was marketed as completely scalable. Its promoters claimed that transaction confirmation time in a DAG-chain falls as the number of users rises. In practice, DAG networks have needed extra safeguards: IOTA relied on a central “coordinator” node run by the IOTA Foundation, and when the foundation shut that coordinator down on 12 February 2020 after a wallet vulnerability, the whole network stopped.

Problem 2: Rising Transaction Costs

With external mining, the requirement of more energy and a massive user base the cost of a transaction done over traditional blockchain is bound to increase.

However, there is no such scenario in the case of DAG-chain. Dagcoin’s promoters claimed that a transaction with a merchant or on a Dagcoin exchange cost 0.0005 US dollars and would never increase. That figure came from the company and could not be independently verified.

No network can guarantee that its costs will never change, and a low transaction fee says nothing about whether the coin itself holds its value.

What else does Dagcoin offer?

Dagcoin set up its own business platform for merchants called DagPay. As of September 2026, the DagPay website is still online and offers merchants a website checkout, a point-of-sale system and email invoicing for accepting dagcoin. Merchants can register themselves, free of cost, with Dagcoin Merchant Finder and utilize DagPay to send or receive payments in Dagcoin.

Dagcoin was marketed as more user-friendly than any other cryptocurrency, but it did not achieve worldwide adoption. Instead, the central banks of Jordan and Oman singled it out in warnings, and Bermuda police warned in April 2022 that its marketing arm, Success Factory, bore the hallmarks of a pyramid scheme.

Conclusion

Dagcoin & DAG-chain were promoted as a revolution that would make blockchain a thing of the past. That prediction has not come true: Bitcoin and Ethereum still run on blockchains, DAG designs continue in projects such as IOTA, Nano and Hedera, and Dagcoin itself became the subject of an Estonian criminal investigation into suspected investment fraud. Anyone approached to buy dagcoin or join Success Factory should read the warnings and red flags below first.

What Is a DAG-Based Cryptocurrency?

A directed acyclic graph (DAG) is a graph of points connected by one-way links in which following the links never leads back to the starting point. Some cryptocurrencies store transactions in a DAG instead of a single chain of blocks, so several transactions can be added in parallel rather than waiting for the next block.

In a traditional blockchain, miners (proof of work) or validators (proof of stake) bundle transactions into blocks, one after another. The beginner’s guide to the Bitcoin mining process explains how proof-of-work mining works. In a DAG ledger, each new transaction is typically linked to earlier ones. In IOTA, for example, a node that issues a new transaction must approve two previous transactions, which is why IOTA has no miners and no transaction fees.

Which real projects use DAG technology?

• IOTA went live in 2016 and stores transactions in a DAG it calls the Tangle. It was designed for Internet of Things payments. Critics pointed to its reliance on a coordinator node run by the IOTA Foundation, which was founded in Berlin in 2018.
• Nano launched in October 2015 as RaiBlocks and was renamed Nano in 2018. It uses a “block-lattice” in which every account has its own chain, offers fee-free transactions, and reaches consensus through Open Representative Voting, a variant of proof of stake.
• Hedera uses the hashgraph algorithm invented by computer scientist Leemon Baird. Its mainnet launched in 2019, it is governed by a council whose members have included IBM, Deutsche Telekom and Google Cloud, and in September 2024 it moved its source code to the Linux Foundation as the open-source project Hiero.

DAG ledgers vs. blockchains at a glance

The table shows that using a DAG does not by itself make a coin safe or valuable. What matters is who controls the network and the supply, whether the claims can be checked, and whether regulators have issued warnings. For the wider background, see the basics of the cryptocurrency market and this explainer on blockchain technology, crypto and NFTs.

What Happened to Dagcoin?

Dagcoin’s history, as reported by police, central banks and news outlets, runs as follows:

1. Spring 2018: According to the Estonian Police and Border Guard Board, four Estonian men created dagcoin and promoted it through multi-level marketing on trading platforms they set up themselves.
2. 2019: The Central Bank of Jordan issued a warning that mentioned dagcoin, according to CoinDesk.
3. 16 June 2020 to 15 June 2022: The dagcoin business held an Estonian virtual currency services license.
4. October 2020: The Central Bank of Oman warned the public about the high risks of cryptocurrencies and specifically highlighted dagcoin, stating that it had licensed no one to trade crypto and that anyone dealing in them does so on their own responsibility. CoinDesk noted that the BBC had reported an influx of former OneCoin promoters into dagcoin.
5. April 2022: Bermuda Police Service’s Serious Crime Unit warned that Success Factory, which recruited members at four levels costing €125 to €1,000, bore the hallmarks of a pyramid scheme and heavily pushed members to invest in dagcoin, which it described as a “junk crypto currency”. Police said members were reportedly unable to redeem their currencies for up to three years.
6. October 2022: Estonia’s Central Criminal Police detained four men suspected of investment fraud. Two suspects were remanded in custody for up to two months.
7. September 2026: The dagcoin.org domain now promotes a token called DAGS, described as deflationary, with its contract shown on BSCScan and trading listed on the LBank exchange. The DagPay merchant site remains online.

A suspicion is not a conviction. No court verdict against any of the suspects was found in the sources reviewed for this update, so the case should be treated as an open investigation, not a proven crime.

Is Dagcoin a Scam? What the Authorities Say

Dagcoin has been the subject of central bank warnings and of a criminal investigation into suspected investment fraud in Estonia. No regulator has endorsed it. The main official statements are:

• Estonian prosecutors: District Prosecutor Kristiina Laas said the suspects “artificially inflated the price of dagcoin”, creating a public impression of a functioning virtual currency. Police said the coin’s price was tied to its number of users, and that the creators presented the coin as sold by independent people while controlling the related companies themselves. Most victims were from outside Estonia.
• Estonian police: Leho Laur, head of the Economic Crime Bureau, warned that the promise of high profits and zero risk is the first sign of danger.
• Bermuda Police Service: Detective Superintendent Nicholas Pedro said the only apparent way to make money from Success Factory was to recruit people, and urged the public to avoid putting money into it.
• Central banks of Jordan and Oman: Both named dagcoin in public warnings about the risks of cryptocurrencies.

Before buying any lesser-known coin, check the legal safeguards available to crypto investors in your country and search your regulator’s warnings for the coin’s name.

Red Flags to Watch For in Coins Like Dagcoin

The warning signs named by Bermuda police, Estonian police and the US Federal Trade Commission (FTC) apply to any crypto offer:

• Recruitment comes first. Bermuda police listed three hallmarks of a pyramid scheme: an emphasis on recruiting, no genuine product or service being sold, and a complex commission structure.
• Guaranteed profits or zero risk. The FTC says only scammers guarantee profits or big returns.
• A price that depends on growth in users. In the dagcoin case, prosecutors said the price rose with the number of users and that both were allegedly inflated.
• Locked funds. Rules that stop members cashing out for months or years, as police described for Success Factory, prevent people from testing whether the value is real.
• Big claims without details. The FTC notes that honest advisers give details, while scammers make big claims without them. Fixed-fee or speed promises that cannot be independently checked belong in this category.

What to Do If You Bought Dagcoin or Joined Success Factory

1. Stop sending money and stop recruiting. Do not pay for upgrades, new membership levels or “unlock” fees.
2. Keep records. Save receipts, wallet addresses, transaction IDs, chat messages and the names of the people who signed you up.
3. Report it. In the United States, the FTC lists ReportFraud.ftc.gov, the CFTC complaint form, the SEC tips portal (sec.gov/tcr) and the FBI’s Internet Crime Complaint Center (ic3.gov). Elsewhere, report to your national police and financial regulator, and to the exchange you used.
4. Secure your wallets. Never share a recovery phrase with anyone who promises to help; this guide on how to secure a seed phrase explains why.
5. Be careful when cashing out. Follow the steps in this guide to avoiding scams when withdrawing crypto to a bank account, and treat any offer to recover lost crypto for an upfront fee with suspicion.

The FTC notes that recovering money sent to a scammer is difficult, but reports help authorities investigate and warn others.

Frequently Asked Questions

Is Dagcoin legit?

Dagcoin has not been shown to be a legitimate investment. The central banks of Jordan and Oman warned about it, Bermuda police said its marketing arm Success Factory had the hallmarks of a pyramid scheme, and Estonian police detained people linked to its creation in October 2022 on suspicion of investment fraud involving nearly €8 million.

Who created Dagcoin?

Estonian police said dagcoin was created in spring 2018 by four Estonian men. According to ERR News, the suspects detained in October 2022 included owners of several companies connected to the coin.

What is Success Factory?

Success Factory is a membership and recruitment scheme connected to dagcoin. Bermuda police said in April 2022 that it charged €125 to €1,000 for four membership levels, pushed members to invest in dagcoin, and appeared to make money only through recruiting.

What is DAG-chain?

DAG-chain is Dagcoin’s name for a ledger built on a directed acyclic graph, a structure in which transactions link to earlier transactions instead of being grouped into blocks. The underlying idea is real and is used by IOTA, Nano and Hedera, but the label says nothing about whether a particular coin is trustworthy.

Is DAG technology better than blockchain?

DAG ledgers can offer low or zero fees and fast confirmation. Nano, for example, describes fee-free transactions confirmed in under one second. They have trade-offs too, such as IOTA’s past reliance on a central coordinator. Blockchains remain in wide use, and neither design has replaced the other.

Did DAG-chain make blockchain obsolete?

No. Bitcoin still runs on a proof-of-work blockchain, and Ethereum moved to proof of stake on 15 September 2022, cutting its energy use by over 99%. That weakens the energy argument made in the original version of this article.

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