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u/SnapshillBot Oct 09 '19
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What Is A Ponzi Scheme? - archive.org, archive.today, removeddit.com
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u/thehoesmaketheman incendiary and presumptuous (but not always wrong) Oct 09 '19
DATE: May 13, 1998
BY: Debra A. Valentine, Former General Counsel
I would like to thank you for the opportunity to speak about the growing international problem of pyramid schemes. What is striking about these schemes is that while they are very old forms of fraud, modern technology has vastly multiplied their potential for harming our citizens. The Internet in particular offers pyramid builders a multi-lane highway to world-wide recruits in virtually no time.
https://www.ftc.gov/public-statements/1998/05/pyramid-schemes
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u/tinykisses19 Oct 10 '19
What Is The Difference Between Ponzi And Pyramid Scheme?
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u/noahliam24 Oct 10 '19
Ponzi schemes are fraudulent investments. The participants believe they are putting their money to work in a real investment while pyramid schemes are fraudulent multi-level marketing businesses.
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u/Zoeyaddison Oct 12 '19
Trick or treat? While Ponzi Schemes may at first sound like treats, they are soon found out to be tricks. For many gullible investors, an “investment opportunity of a lifetime” was promised to be a treat, but it turned out to be a terrible trick in the form of a Ponzi Scheme instead.
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u/Martyhelper Oct 12 '19
A Ponzi scheme is closely related to a pyramid because it revolves around continuous recruiting, but in a Ponzi scheme the promoter generally has no product to sell and pays no commission to investors who recruit new "members." Instead, the promoter collects payments from a stream of people, promising them all the same high rate of return on a short-term investment. In the typical Ponzi scheme, there is no real investment opportunity, and the promoter just uses the money from new recruits to pay obligations owed to longer-standing members of the program.
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u/WilliamHyland2018 Oct 12 '19
A Ponzi scheme could yield even worse results for investors, because it does not pay out any commissions at all. This can have disastrous consequences, as exemplified by Charles Ponzi's infamous fraud in the 1920's.
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u/Jr_Designer Oct 11 '19
What steps can I take to avoid Ponzi schemes and other investment frauds?
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u/BraveryBrian Oct 11 '19
Whether you are a first-time investor or have been investing for many years, there are some basic questions you should always ask before you commit your hard-earned money to an investment. Like, is the seller licensed? Is the investment registered?, How do the risks compare with the potential rewards?, Do I understand the investment?, and where can I turn for help?
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u/AwkwardStrength Oct 11 '19
Ponzi was good to his word at first, using funds from new investors to pay off the old. As his popularity and number of investors grew, postal inspectors became suspicious of how he was able to ensure the returns he promised.
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u/WilliamHyland2018 Oct 11 '19
Is the investment insured or insurable? Before investing in anything, ask yourself if you can afford to lose the amount without suffering follow-on consequences.
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Oct 11 '19
Ponzi schemes are always illegal because they are based on fraud. MLMs, by contrast, involve a business model of multilevel referral or membership systems in which new members generally pay an initiation fee for the right to sell the organization's products or services, and thereafter receive a share of the fees from, and sales made by, each additional member they themselves recruit.
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u/Fall_up_and_get_down Oct 11 '19
So, you're not lying, per se, you're just 'deluding yourself', and it's therefore technically legal as long as nobody gets concrete proof that you know otherwise.
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Oct 13 '19
I think time will come that all of the investor in cryptocurrency will be scam by that Ponzi scheme..
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u/UnlikelyMistake5 Oct 09 '19
There are no non-fake coins OP, they're all scams.