SEC-S17W3 - "Let's talk about Ponzi scheme"

You've probably seen those ads at least once in your lifetime, right? You know, the ones like "Put in $100 today, take out $1000 next month," "Jump on board now and make a quick buck!" or "New investment program promising 700% returns in just a year, super easy and totally safe!" Or maybe it's that old buddy you hardly ever see popping up out of the blue saying, "Hey, wanna get in on this booming investment thing everyone's talking about? Small investment, big returns in no time. Are you interested in joining?"

_{If you've ever been in that situation and saying "yes" to those offers, I bet you've already kissed some of your money goodbye in the worst possible way. Or if you've firmly said "no," chances are your friend who pitched you that investment scheme is now either on the run or out there looking for another victim to fleece. Why? Because that's the oldest trick in the Ponzi playbook. Image source here}

Nobody is immune to Ponzi schemes

I have countless stories about this Ponzi scheme, both from my personal experiences and from people I know. What's surprising is that some of the Ponzi scheme victims aren't necessarily "less intelligent" or uneducated. In fact, many of them come from the business and executive circles. This proves that anyone can potentially fall victim to Ponzi scheme scams, regardless of your collar color, from Blue Collar to white collar workers, everyone is at risk.

Back in the day, the term Ponzi scheme wasn't widely known. I remember back then it was mostly called a pyramid scheme or MLM (multi-level marketing). Over time, this term started gaining popularity as more and more cases of scams and bogus investments with the same pattern emerged, which is recruiting as many downline members as possible to feed the upline.

_{Honestly, I don't really mind if there's an MLM company that actually sells real products even if it's labeled as a pyramid scheme. I just see it as part of their marketing strategy that benefits both the company and its members. Even if the product quality is poor, as consumers, we need to be smart. We shouldn't end up buying low-quality products, especially if they're expensive. It's no secret that MLM products are often priced above average, right? Image source here}

But what really ticks me off is those MLM companies that are basically just selling false hopes, nothing else. This is what we now know as a Ponzi scheme, a term adopted from the name of the legendary scammer, Charles Ponzi.

Charles Ponzi is still 'alive'

So, in 1920, the US authorities nabbed Charles Ponzi on charges of fraud and embezzlement of $20 million (back then). Initially, his business seemed legit—he bought international reply coupons (IRCs) from other countries and resold them in America. He making a profit from the price difference caused by inflation in the country where he bought the IRCs.

_{FYI, for you Gen Z Steemian who don't know what an IRC is, back in the day, sending mail required stamps. When someone sent mail to an address abroad and wanted a reply, they could buy an IRC so the recipient didn't have to bother buying stamps to send their reply. Image source here}

Over time, his business grew bigger, and more and more investors started putting their money in Ponzi's hands. Besides the success of his stamp business, people flocked to invest with Ponzi because he promised investors huge returns within a specific timeframe, and those returns would increase if investors managed to bring in more people to invest with them. This pyramid scheme eventually unraveled, and the master swindler couldn't fulfill his initial promise to return investors' money.

In Indonesia itself, there are plenty of artists and public figures involved in scams like this. Most of them play the role of affiliates, tasked with gathering as many "investors" as possible through their influence and engagement. These affiliates often flaunt a hedonistic lifestyle on their social media platforms. Luxurious houses and apartments, supercars, and extravagant living become inseparable from their image.

Let's take a legendary case in Indonesia, for example. You can search for the keyword "First Travel" in the search bar and you'll find thousands of news articles highlighting the cruelty of the Ponzi scheme perpetrators. The losses caused by this case amounted to 900 billion rupiahs or more than 55 million dollars. Crazy, right?

What's even crazier is that the perpetrator sold "religion" as their product, they promising affordable umrah trips (a religious activity in Islam similar to Hajj, involving several rituals in the holy city of Mecca). Tens of thousands of people flocked to register, most of whom were from the middle to lower economic class, eager to perform umrah in Mecca. Turns out, the money collected from the pilgrims was used by the owner to indulge in luxury. They were always seen traveling abroad and flaunting luxurious items in their social media posts.

_{Charles Ponzi may be wicked for his deceit, but to me, someone who sells "religion" like this is even more bast*rd. Image source here}

The second case that was booming back in 2022 was quite a story. There was this group of celebs always flaunting their lavish lifestyles, claiming it was all from gambling masked under the guise of "trading" binary options and trading robots. Yep, once again, they were just affiliates making a profit off the downline they recruited. Now, some of these affiliates are behind bars, with all their assets seized by the government. Never seen how their lives turned out after that.

Whether it's true or not, there's a rumor about a "Big Actor" behind these affiliates. This big actor never appears on camera but allegedly engages in money laundering practices, involving celebrities as affiliates or even starting other businesses. It's not uncommon to see many new company owners, usually in skincare, who were previously unknown but suddenly live a wealthy life under the pretext of having a skincare business. Yet, it's actually this big actor behind these fake owners. Makes sense, doesn't it?

_{I call them all reincarnations of Charles Ponzi. Although the original Ponzi is long gone, the birth of other Ponzis is inevitable. As long as human greed exists, this scheme will persist, only the names and strategies will change. Image source here}

My Personal Experience

I've had a few experiences with Pyramid schemes, but let me tell you about the most recent one I encountered. A friend of mine invited me to try out a cryptocurrency mining project using bots. Right from the start, my friend and I knew it was a Ponzi scheme disguised as crypto mining, so we didn't have high hopes.

Why did we agree it was a Ponzi scheme? Well, from the moment we signed up, we tried using our friend's referral code, and that person immediately made a ton of profit. I decided to join in because I was intrigued by people always pulling in big profits from the mining project, and I wanted to see if it was true.

Funny thing is, a few days before the "investment company" went bust, my friend said, "We'll have to withdraw soon because I'm sure this won't last more than a month, then it'll all be over." Just a few days after he said that, we suddenly couldn't withdraw the assets I had previously deposited. We both burst out laughing because we had expected this to happen. I lost 300 USDT, roughly 1000 STEEM in that bogus mining project.

_{Although it was hilarious, the experience reminded me never to get involved in sketchy investments again, no matter what form they take. My wife scolded me for it, even though I tried to defend myself by explaining that I was just experimenting. She told me, "If something seems too good to be true, it's probably just a pipe dream". Image source here}

For young readers out there, remember there ain't no such thing as a free lunch. Don't fall for offers that seem too high because it could be a trick to attack your subconscious mind and get you to join them. People won't invite you to get rich with them because, by human nature, people are greedy and want to control all resources for themselves. If you've already gotten involved in a Ponzi scheme, find a way out as soon as possible before you lose even more.

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Thank you for taking the time to read my post

Have a great day

El-Nailul