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Author Topic: How to recognise a ponzi scheme  (Read 5522 times)
Vladimir
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July 04, 2012, 10:19:08 PM
 #1

The Inventor:
http://en.wikipedia.org/wiki/Ponzi


The Champion:
http://en.wikipedia.org/wiki/Madoff



http://en.wikipedia.org/wiki/Ponzi_scheme

I know one thing, it
"sounds too good to be true"
It seems there are lots of experts on the topic around here.
 
Feel free to share with us what ponzi schemes look like.
How to recognise investments that have high probability to actually be a ponzi scheme.

Share your experience with ponzi schemes, whether it is
running it
or
losing lots of money
or
making lots of money
or
promoting it
or
suffering from a ponzi related stockholm syndrome


There are many resources dedicated to helping people to recognize and avoid scams:
http://www.sec.gov/answers/ponzi.htm
http://www.fsa.gov.uk/consumerinformation/scamsandswindles
http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02597.html
http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/vwapj/Little-Black-Book-Scams-e.pdf
http://www.kpmg.com/ca/en/whatwedo/specialinterests/at-risk-magazine/pages/ponzischemes%E2%80%93howtorecognizethem.aspx
http://www.fbi.gov/scams-safety/fraud/


There is some action that can be taken by people to protect themselves and others:
http://www.fsa.gov.uk/consumerinformation/if_things_go_wrong
http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02801.html

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July 04, 2012, 11:22:54 PM
 #2

anyone who hides their business model is up to no good.
Bitcoin Oz
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July 05, 2012, 12:41:36 AM
 #3

anyone who hides their business model is up to no good.

I thought it was clear silk road needs a mixer ?

Vladimir
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July 05, 2012, 12:43:45 AM
 #4

anyone who hides their business model is up to no good.

I thought it was clear silk road needs a mixer ?

yep, we heard ya, and this is an intriguing thought.

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humanitee
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July 05, 2012, 12:46:15 AM
 #5

That was my initial thought but why minimum investment now? That was the straw that broke the camel's back for me, and made no god damn sense unless it was a ponzi.

Interested to hear some theorizing on that front.
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July 05, 2012, 01:08:50 AM
 #6

I have the post directly under his OP which states now "Smells like a classical HYIP scam."

Some of you guys wanna rent it as advertising space?  
I don't wanna derail the thread but...

scnr  Cheesy

First they ignore you, then they laugh at you, then they keep laughing, then they start choking on their laughter, and then they go and catch their breath. Then they start laughing even more.
PatrickHarnett
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July 05, 2012, 01:17:16 AM
 #7

anyone who hides their business model is up to no good.

The original ponzi business model was transparent enough.

Also, look around at the businesses you think you know and question their models.
Stephen Gornick
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July 05, 2012, 03:12:39 AM
 #8

Can't believe nobody has posted a photo of Ben.

Or this guy:


imsaguy
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July 05, 2012, 03:13:31 AM
 #9

anyone who hides their business model is up to no good.

Like Apple hiding their products so people can't copy them?

Coming Soon!™ © imsaguy 2011-2013, All rights reserved.

EIEIO:
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July 05, 2012, 03:18:13 AM
 #10

The world runs on 3 things I call GOD. Gold ,Oil and Drugs. Which one is most likely to be involved with bitcoin ?


PatrickHarnett
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July 05, 2012, 03:51:58 AM
 #11

The world runs on 3 things I call GOD. Gold ,Oil and Drugs. Which one is most likely to be involved with bitcoin ?



WTF has gold got to do with anything.  Most US wars are over oil and ideology and that's where the money is.

And which one is the US dollar most likely to be associated with?
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July 05, 2012, 04:24:42 AM
 #12

anyone who hides their business model is up to no good.

I thought it was clear silk road needs a mixer ?

The SR is/was US based. That's the reason why there's no foreign language support and the only options to see prices is with USD/BTC

...مكتوب
Escape the plutocrats’ zanpakutō, Flower in the Mirror, Moon on the Water: brave “the ascent which is rough and steep” (Plato).
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Let's talk governance, lipstick, and pigs.


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July 05, 2012, 02:16:44 PM
 #13

The world runs on 3 things I call GOD. Gold ,Oil and Drugs. Which one is most likely to be involved with bitcoin ?
All three. I'll sell my gold for Bitcoin to buy fuel to pick up my prescription.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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July 05, 2012, 03:32:20 PM
 #14

Not an expert.

But, correct me if I'm wrong, it boils down to the following easy-to-determine model (in the case of Bitcoin at least:)

1) People contribute their X bitcoins
2) The "business" does something with the bitcoins
3) Everyone receives X+Y bitcoins back

If there's no other reasonably plausible source for the Y bitcoins, it's almost certainly a ponzi scheme.

Now, concerning the individual accused of having the above business model. I've not read all of the related threads; has he provided a reasonably plausible source for the bitcoin "interest" he returns? My understanding was that he avoids using the exchanges.

Bitcoin is the ultimate freedom test. It tells you who is giving lip service and who genuinely believes in it.
...
...
In the future, books that summarize the history of money will have a line that says, “and then came bitcoin.” It is the economic singularity. And we are living in it now. - Ryan Dickherber
...
...
ATTENTION BFL MINING NEWBS: Just got your Jalapenos in? Wondering how to get the most value for the least hassle? Give BitMinter a try! It's a smaller pool with a fair & low-fee payment method, lots of statistical feedback, and it's easier than EasyMiner! (Yes, we want your hashing power, but seriously, it IS the easiest pool to use! Sign up in seconds to try it!)
...
...
The idea that deflation causes hoarding (to any problematic degree) is a lie used to justify theft of value from your savings.
Vladimir
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July 05, 2012, 06:38:55 PM
 #15

It makes sense. It is so simple, is it not?

That specific individual is anonymous and there is no any evidence whatsoever known to me of:
Quote
2) The "business" does something with the bitcoins

He made a number of vague statements regarding this 2) but those statements have been inconsistent at least.

I personally do not believe a single word he says and until proven to the contrary assume that whatever he say is likely a lie.

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westkybitcoins
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July 05, 2012, 07:47:24 PM
 #16

It makes sense. It is so simple, is it not?

That specific individual is anonymous and there is no any evidence whatsoever known to me of:
Quote
2) The "business" does something with the bitcoins

He made a number of vague statements regarding this 2) but those statements have been inconsistent at least.

I personally do not believe a single word he says and until proven to the contrary assume that whatever he say is likely a lie.


The thing is, step 2 is largely irrelevant. The bulk of the business will be done in USD, Euros or whatever, and any profits still have to be converted back to bitcoins.

Of course, one could claim the business was done in bitcoins. But that has problems that could actually be worse than the whole thing just being a ponzi. At the very least it would suggest that those borrowing the bitcoins are selling goods and/or services directly for bitcoins. I find that pretty implausible myself.

Bitcoin is the ultimate freedom test. It tells you who is giving lip service and who genuinely believes in it.
...
...
In the future, books that summarize the history of money will have a line that says, “and then came bitcoin.” It is the economic singularity. And we are living in it now. - Ryan Dickherber
...
...
ATTENTION BFL MINING NEWBS: Just got your Jalapenos in? Wondering how to get the most value for the least hassle? Give BitMinter a try! It's a smaller pool with a fair & low-fee payment method, lots of statistical feedback, and it's easier than EasyMiner! (Yes, we want your hashing power, but seriously, it IS the easiest pool to use! Sign up in seconds to try it!)
...
...
The idea that deflation causes hoarding (to any problematic degree) is a lie used to justify theft of value from your savings.
GeniuSxBoY
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July 05, 2012, 08:47:45 PM
 #17

American insurance: biggest ponzi scheme ever
pirateat40
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July 05, 2012, 08:51:25 PM
 #18

American insurance: biggest ponzi scheme ever

Nah its social security.


bulanula
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July 05, 2012, 08:57:07 PM
 #19

Biggest red flags IMHO : huge returns over 3000% anually and after a while he still needs to use investor money ( instead of using his own capital to get filthy rich ).

This is a ponzi. Clear as day ...

The NDA and "I can't show you my business" is BS because he clearly hasn't got a clue. Arbitrage ? LOL !

Maybe he has invented time travel or free source of electricity from antimatter and he is using that to fund a mining operation where aliens are paying him to siphon all the BTC to another planet !

Occam's razor FTW doods ...
damnek
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July 05, 2012, 09:16:34 PM
 #20

Although I have nothing invested in BS&T, the whole ordeal worries me a bit. What if it turns out that clients don't get their funds back? In that case bitcoin will have to take another hit, and price will go down, which also hurts my bitcoin savings. I really hope we'll see some clarification soon..

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