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Scam Logs: Ponzi Schemes

Scam Logs: Ponzi Schemes

Welcome back to the Scam Logs! Today, we will cover a scam by no means unique to the crypto space, or even the internet. This scheme is old and well known for how devious and widespread it can get before detection.

I’m speaking about Ponzi schemes. This is a type of scam that relies on moving money around.

If you don’t know the gist, here’s how it works: a person promises a return on investment but pays the investor with money from other investors. If some fee is taken from each person, the scammer makes money—and investors lose money once it falls apart.

But how to spot this scam? Well, Ponzi schemes are not real investment plans. So, there will be likely red flags. One possible warning is they seem “too good to be true.” The promised returns might be too consistent and the amounts too high.

Other aspects that could indicate something is wrong are the paperwork or the documentation. If how the investment works is not clear or seems full of hidden or missing information, then you should suspect a scam—even if it is not a Ponzi scam. You may also have trouble moving money in or out of the service. It’s all a byproduct of their criminal system and the whole thing should be avoided at all costs.

And that’s this week of the Scam Logs. Always be careful out there, and we’ll see you soon.

By |2021-02-20T02:09:07+00:00February 17th, 2021|DFN COLUMNIST|0 Comments

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