Bitcoin Forum

I'm going to make a short list indicators on how you can spot an obvious ponzi scam website. Please tell me if this board is the right place for this content.

You can give suggestions and other variables so I will edit the list below.

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.

How to avoid Ponzi
Obviously, if you noticed that an investment platform has the characteristics of red flags metioned above then stay away from it make report the site to any authorized people/websites. Don't invest without a thorough research coz you will end up nothing and lossing your money instead of profit.


Famous Ponzi Scheme in Crypto-world
Bitconnect.co the most known ponzi in cryptocurrency (https://en.m.wikipedia.org/wiki/Bitconnect)
Onecoin running a centralized private ledger (https://en.wikipedia.org/wiki/OneCoin)
My Big Coin team misappropriating more than $6 million from customers in a cryptocurrency-fueled Ponzi scheme. (https://www.ccn.com/cftc-charges-gold-backed-my-big-coin-with-6-mil-fraud/)
Plexcoin claiming would yield a 1,354 percent profit in less than 29 days (https://www.sec.gov/news/press-release/2017-219)


Videos Related to Ponzi
The Wizard of Lies (Movie Trailer) - https://www.youtube.com/watch?v=D1mhAB-790A
Bernie Madoff The $50 Billion Ponzi Scheme - https://www.youtube.com/watch?v=q_RVG2qBB_U
In Search Of History - Charles Ponzi & His Scheme (History Channel Documentary) - https://www.youtube.com/watch?v=6pxxS07PZn0


Where to report Ponzi Scheme
https://www.sec.gov/tcr
https://badbitcoin.org/
https://bitcointalk.org/index.php?board=83.0 (Create a thread on Scam Accusation)


References:
https://en.wikipedia.org/wiki/Ponzi_scheme
https://en.wikipedia.org/wiki/Charles_Ponziarles_Ponzi
https://www.biography.com/people/charles-ponzi-20650909
https://www.sec.gov/fast-answers/answersponzihtm.html
https://www.fbi.gov/scams-and-safety/common-fraud-schemes/ponzi-schemes


Disclaimer: Linked websites does not equal to endorsement.

Beginners & Help is a good place for this kind of content. It is quite important to educate newcomers of the existence of these attempts to get their money. A great thing you did is that you listed all your sources, this kind of articles are rare here on the forum. If I were you, I would mention briefly the most known collapsed ponzi schemes of the crypto world (after all we are here at BTT), for example Bitconnect, Davorcoin.

Thank you, I added Famous Ponzi Scheme in Crypto-world label, bitconnect was added, will add more later. And have to research about Davorcoin first since its the first time I heard about this coin.

Rule of thumb for me, if something is too good to be true, it is likely a scam or a Ponzi scheme.  The stock market is relatively risky and will historically give you an annualized return of roughly 10% on your money.  If someone is promising you a guaranteed 20-50% return on your money, then you should be really careful.  Just my opinion. 

Good post. All high returns on investment will consider ponzi scheme. From our past experience we can see all of ponzi scheme became scam later on. Few crypto site we can see lately they are offering high returns, I would like to suggest just avoid this kind of projects. Due to your much greedy thinking you might be loss your capital. So be careful before join any ponzi scheme. Once new investment not come they will simply skip with your fund. I worry when I see high promising website or high return website. Because this is the sign of scam.

Thank you. Yes, all of crypto cloud mining which is known as ponzi offers huge returns which people should be aware of investing in. They just lure people with their too good to be true rates, commission/referrals rewards and calculator. But still, even there's a huge warning sign, people keep investing in these kind of scheme because they are hoping of easy money -- greediness. That's the severe disorder of every human-kind that cannot aid even the most skilled medic.

If an investment site promised a 10% daily and required referral to earn more or to withdraw it is a high-yield investment program (HYIP) or ponzi scheme some of the famous HYIP site i remember was lazer.online and auroramine cloudmining. Today there's still alot of this kind of site just search HYIP site in google and you will see them. The sad thing to see is alot people still invest to this site.

Well in reality , any investment can be considered a ponzi scheme. The early investors will always make more than the later investors, thats the whole basis of capitalism.

Ponzi schemes began with traditional finance, as in Ponzi and Bernie Madoff. But of course, they can be found in cryptocurrency too. We should be aware. The Wizard of Lies movie sent shivers up my spine. Horrific.

Added Onecoin.eu (https://en.wikipedia.org/wiki/OneCoin), My Big Coin (https://www.ccn.com/cftc-charges-gold-backed-my-big-coin-with-6-mil-fraud/) and Plexcoin (https://www.sec.gov/news/press-release/2017-219) as famous ponzi scheme in cryptocurrency world.

The mother of all crypto scams is bitconnect.  I can't believe that piece of garbage was once a top 10 coin.  A lot of suckers fell for the hype and got blinded by greed.

a couple co-workers talked me into investing into bitconnect. Luckily I was cautious and only invested 100 bucks. I think it lasted 12 days after I invested and then they shut down.

I even have a friend who is a businesman who invested on their lending platform and he has a group that discussing and having sessions on some offices encouraging some workers on our local to invest as well, thats way back january. I warned him already about this platform but seems he's still willing to do it so I just let him until they shutdown the platform on that month also. Luckily he didn't lost that much.

Wow, OP, great job! Wish there were more users like you - taking the time to educate others.
I think it is really important. There are lots of threats in the crypto-world and so many people getting scammed in spots that might be really obvious if they knew about these threats. I myself try to tell others about scams and schemes. Thanks again mate!

It always begins from you, educate yourself first before doing something that is too risky especially if it talks about money or even personal information. There will be 0 victims of scams from ponzi, fraud or any other scam attempts if only people educate their self first and be knowledgeable enough to stay away such activities.

But even there are hundreds or even thousands of guides of how to protect/stay away blablabla if you're an idiot then you will be an idiot for the rest of your life. You are a victim, victimize and will be victim again of scams only if you want to stay at that point. ;)

Cryptocurrency was somehow ralated to ponzi scheme. I just wish if you had also make a point of view between ponzi scheme and cryptocurrency. Could we consider cryptocurrency a Ponzi scheme? If yes or no, Why? I have been so much hearing all of this in altcoin board discussions and in my point of view cryptocurrency is neither related with Ponzi Scheme. Cryptocurrency has no relevance on ponzi schene instead I am seeing cryptocurrency as a payment system in the near future that uses blockchain for transparency in every system integrated with it.

Well articulated post revealing all about ponzi AMD ways to avoiding them. But I must add that cryptocurrency is nothing like ponzi scheme and should not be attributed to it

Does bitcoin/crypto promised anything that you will get X% of profit when you own any bitcoin/crypto in just X day/month/year? No.

Does bitcoin/crypto have the idea of referral system/payment/bonus? Where you get X of profit when you invite someone to have bitcoin/crypto? No

Only people who doesn't have any fraction of bitcoin/crypto only said that this payment system is a ponzi. Except to those Cryptocurrency that is proven Ponzi which is literally a ponzi and should be avoided.

Yeah, thank you as well. But please don't quote the whole op especially if its too long when you're replying coz its annoying.

That's 100% good advice for newbies, but the initial statement is not necessarily true.

Ethereum and EOS for example have astronomical yields since their ICO and they're not ponzies.

But true, newbies should be skeptical of high yield promises.

Brilliant post, in my opinion, it should be a sticky...

a lot more of these will appear' whether we like it or not. A boost in confidence in the market and it will go again, FOMO will happen and so will the greed.

I could easily add more to that list if you have or want to make a current list of Ponzi style websites?

If you're going to avoid Ponzi Schemes, you mind as well avoid these other schemes as well. https://en.wikipedia.org/wiki/Confidence_trick#See_also

Ye, there are so many types of these where people should be aware of. And regarding to that, maybe someone can do make posts about that, since this thread is only for ponzi type of schemes.

Bumping for visibility!