In a world where investments promise high returns, Ponzi schemes emerge as a disguised danger.
- **Objective:** Alert readers about how they operate, identify warning signs, and avoid falling into them.
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What is a Ponzi scheme?**
- **Definition:** A fraudulent scheme that pays "profits" to old investors with the money from new participants, without any real economic activity.
- **Origin:** Named after Charles Ponzi (1920), who defrauded millions with international postal coupons.
- **Key:** Survives as long as there are new investors; collapses when the flow stops.
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*How do they work?**
1. **Attraction:** Offer exceptional returns
2. **Illusion of success:** Timely initial payments to build trust.
3. **Recruitment:** Incentivize investors to bring more people.
4. **Collapse:** When there are no new funds, the system collapses.
5. Historical examples**
- **Charles Ponzi (1920):** Promised to double investments in 90 days with postal coupons.
- **Bernie Madoff (2008):** USD $65 billion fraud, affecting celebrities and international funds.
- **Recent cases:** Schemes in cryptocurrencies or fake projects on social media.
6. Warning signs**
- **Supernatural returns:** If it sounds too good to be true, it probably is.
- **Opacity:** No clarity on how profits are generated.
- **Focus on recruitment:** They pressure you to bring more investors.
- **Lack of records:** Not backed by regulatory financial entities.
**Differences with pyramid schemes**
- **Ponzi:** Focused on "investments," without the need to recruit (although it often happens).
- **Pyramidal:** Profits explicitly depend on recruiting people, with commissions by levels.
Impact on the victims**
- **Economic losses:** Often, the last ones to join lose everything.
- **Emotional damage:** Shame, stress, and breakdown of trust relationships.
- **Global reach:** Affecting local communities to large investors.
*How to protect yourself?**
- **Research:** Check if the company is registered with organizations like the CNMV (Spain) or the SEC (U.S.).
- **Be wary of unrealistic promises:** Stable and high returns are a fantasy.
- **Avoid social pressure:** Don't invest just because others are doing it.
- **Financial education:** Learn about real investments (stocks, real estate, index funds).
##Conclusion##
Ponzi schemes serve as a reminder that greed and misinformation are allies of fraud. In a hyper-connected world, prevention and critical thinking are essential tools to protect our resources.
