Hello everyone, I want to share what PONZI is and the history of that term :)
What is a Ponzi scheme?
A Ponzi scheme is an investment fraud platform that requires payment of returns to existing investors from funds contributed by new investors. They often seduce new investors by promising them to invest money for an opportunity claimed to generate high-value returns with small or even no risk at all. They usually or mostly attracting new amount of money to make promised payments to earlier-stage investors to create the false impression that investors are profiting from an authorized business.
History of Ponzi Scheme
These known scheme is named after Charles Ponzi (1882–1949). He received a letter in the mail from a company in Spain that contained in it an IRC/International Reply Coupon (a coupon that can be exchanged for a number of priority airmail postage stamps from another country). Ponzi realized that he could turn a profit by buying IRCs in one country, and exchanging them for more expensive stamps in another country.
Ponzi began to seek investors to turn even higher profits. He promised investors outrageous returns of 50 percent in 45 days, or 100 percent in 90 days. Ponzi paid these investors using money from other investors, rather than with actual profit—as in the criminal scheme of Bernie Madoff.
Ponzi's manipulation made him very rich—he bought a mansion in Lexington, Massachusetts, with air conditioning and a heated swimming pool. He reportedly made $250,000 a day. Ponzi was arrested on August 12, 1920, and charged with 86 counts of mail fraud. Owing an estimated $7 million, he pleaded guilty to mail fraud, and subsequently spent 14 years in prison. Ponzi died penniless in Rio de Janeiro, Brazil, on January 18, 1949.
Red Flags and Indicators
High investment returns. Ponzi schemes typically have a high value of returns, 1% a day, 30% a month or more is ridiculous.
Lack of transparency. The names, contacts, office address of the operators should be publicly shown to run a legitimate business. Which most ponzi doesn't provide their valid address and even names of the operators.
Consistent Returns. Regardless of the market conditions which will rise and fall yet the investment continues to generate regular, positive returns.
Advertised as "risk-free". Ponzi advertised their shaddy service as such as "Invest to us, we are risk-free and are guaranteed to make money for you." in which All investments come with a different degree of risks.
Increasing minimum investment. Ponzi starts off with a very small amount of capital and later grows rapidly for their new investors. Ponzi needs to make their capital grow which is higher than their minimum withdrawal amount so they can pay their old investors by the funds of the new investors.
High rates of commision. Users are highly motivated to promote their referral links due to high commision which is very lucrative.
Difficulty receiving payments. If you do not receive a payment or have difficulty to cash out your investment then its a high chance that the operators doesn't have enough new investors to fund their old investor and a high chance to run your investment and get scammed.