What is a ponzi Scam?
A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi schemes are named after Charles Ponzi. In the 1920s, Ponzi promised investors a 50% return within a few months for what he claimed was an investment in international mail coupons. Ponzi used funds from new investors to pay fake “returns” to earlier investors.
A modern ponzi scam works in the same way.
Here are the main features of a modern ponzi scam
Fake investment company
Almost all the scams on this website are presented as investment companies. If not an investment company then some other sort of fake company is presented.
Most of the scams on this website either give no company information or they give fake company information. There are many forged company certificates shown on their websites.
Some of the scams show real company certificates and information, but they are using someone elses company information without their knowledge.
Some of these scams are properly registered companies. That does not mean they are not a scam, it just means that they filled in the correct form and paid the small fee required to register a company. Many registered companies operate illegally.
It is a legal requirement in almost every country in the world for an investment company to be registered with the government for providing financial services. This is to protect people from fraud. None of the companies on this website have the required financial authority registration. Many of them have fraud warnings issued by the relevant financial authority.
Network marketing or MLM structure
Every scam on this website is an MLM or network marketing company. This simply means that anyone who joins can get additional payments by joining up other people. This is called a referral commission and it is commonly 10-15%. When a new person joins the commission is paid directly to the person who referred them to the company. This encourages people to create elaborate marketing strategies, with seminars, youtube channels, facebook pages and so on as well as most members trying to recruit their friends and family. There is nothing illegal about network marketing but there is no legitimate investment company that has a network marketing structure or pays referral commission to members.
Impossibly high returns offered
A legitimate investment company will offer an annual return %. The annual return may vary from 2% up to 20% for very high risk investments. Some managed returns may not give a guaranteed return but people are paid based on the performance of the investment portfolio.
These scam investment companies usually talk about daily % returns or sometimes weekly % returns. This is absolute nonsense. It is literally impossible to guarantee such high daily or weekly returns. Most of the returns offered on these scam websites are more than 10 times what is possible.There is no legitimate investment company that offers more than 20% annual returns.
Regular payments
In order to fool members into thinking that the company is legitimate, they will make regular payments based upon their impossibly high return rate. However the money is not being made by investments, the money is being collected from new people joining.
It is a common tactic of scammers to show you proof of payment in order to show that it is a legitimate company. That is how a ponzi scam works, it makes regular payments, especially at the beginning, and that is how it becomes established. In the end however people will lose much more than they receive in payments.
Bitcoin or other cryptocurrency
All the companies on this website will accept money only in crypto currencies and will only make payments in crypto currencies. Some of the websites show other payment methods, but it is just for show, in the end you will have to pay in crypto currency. This is done in order to make it difficult for authorities to trace the fraudulent activity of the scam. This is however becoming increasingly dangerous for scammers and there have been prosecutions based upon the transactions in peoples bitcoin wallet. Criminals will find bitcoin to be safer than regular banking, but all bitcoin transactions can be viewed on the Block chain and it is no longer as safe as it used to be.
There is no legitimate investment company that uses bitcoin or any other crypto currency for payment to members. It is impossible to comply with the relevant financial regulations using crypto currency. Therefore you can be sure that if they ask for crypto currency payment for an investment then you are dealing with a scam.
How does it end?
A Ponzi scam will come to an end slowly. If they simply shut down their website and disappear then they are very vulnerable to prosecution. So what they do is after a few years of normal operation payments to members will start to slow down and eventually stop over a period of months or even years. Once payments have stopped, recruiting and promotion will continue and there will be excuses given by management. For example they may say that they have stopped payments due to an audit, or a cyber hack, or they are introducing new technology. This can go on for months or even years and by the time everybody realises that they have been scammed most people have moved on and forgotten about it.
The role of social media
Facebook, Twitter and other social media are facilitating and making possible the expansion of Ponzi scams. Facebook is the ideal media for contacting a large number of strangers and Facebook is complicit in allowing this to happen. They are aware of many scams being promoted and are glad of the business it provides. There is no point reporting a scam, you will just get an automated message and there will be no action. Almost all messages received from strangers are scam promotions.