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What are the main signs to detect a Ponzi scheme or pyramid scheme?

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Pyramid scams or Ponzi schemes are a type of fraud that promises significant financial returns in exchange for an initial investment and the recruitment of more clients or "investors". Sometimes the term "investors' club" is used. Those who organize are usually charismatic people who present you with a scheme where in exchange for your investment and recruitment of other "investors" you can multiply your money without much effort. 

In reality, the "return" or profit comes from the money of those joining the system, which is used to pay those who entered the scheme earlier. The main characteristics of a Ponzi scheme are the following:

 

1. As a general rule of thumb in the investment world, the safer an investment is, the less return it will generate. Any investment that promises a high return involves risk. Any proposition projecting high returns in a safe and guaranteed way is, at the very least, suspicious.

2. Consistent returns: No market remains linear. Investments can go up and down according to different variables. Therefore, if an investment promises returns at all times, no matter what the market is doing, you should be careful, as this may be a strong indication that it is a Ponzi scheme or some kind of scam.

 

3. There is no way to receive payments directly: Ponzi schemes often present a myriad of problems in withdrawing the money you are "earning", which is why they often insist that you "reinvest" it into their investment programs or "partner investment programs". Any legitimate profits should be available to you any time you request them.

 

4. There is no clarity about what is being done with the money invested: If we do not know where the money or the supposed "investments" are coming from, then we must be careful. We should not get carried away by supposedly innovative ideas that do not reflect reality and  only seek to trick us with pompous names and complicated investment concepts.

  • If you think someone is trying to run a scam or recruit you to participate in a potential Ponzi scheme, contact Bitso immediately through our official channels: 

 

For more information on fraud, investment scams, Ponzi schemes or pyramid schemes, see these articles on our blog:

 

https://blog.bitso.com/cómo-detectar-y-evitar-fraudes-2d0b05f28df3

https://blog.bitso.com/ojo-con-las-estafas-fd83e8923efc

 
 

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