How to Know if an Investment is a Ponzi Scheme

If we could chase Ponzi schemes around with our bathroom slippers shouting “ole” all day, we would. 

No, seriously, these so-called “investment companies” are probably the worst thing we’ve seen since whatever the last worst thing was. In 2018, US state and federal authorities found 60 Ponzi schemes holding over $3billion in investor funds. A lucrative market for such schemes means that more will pop up so you have to be careful. 

The worst part is that they take advantage of the bad economy, targeting people who just want to live better. This way, even smart people are vulnerable. 

So if you’ve fallen victim to one of such companies, don’t beat yourself up. It happens to the best of us. 

But let’s tell you how to spot these fake investments, how do avoid them, and advise your friends & family to avoid them too. 

How Fake Investment Schemes Steal your Money and Ghost

So picture this: You’ve been owing rent for 6 months and you don’t know what to do. Your neighbour just bought their second Benz. You don’t know what he does. When you ask him what the secret is, he says it was God who did it. 

Then he sends you a WhatsApp BC that says you can invest some money and get 2% – 3% back every day. 

This thing is sounding like MMM to you but you remember your neighbour’s new Benz. You say to yourself “even if it’s like MMM, maybe I can quickly cash out before anything happens.” 

Their website doesn’t tell you how they will invest your money or what their investment is about. But the issue is you don’t even want to know as long as the money is coming every day. That ₦200,000 you’ve saved up for part of your rent is just sitting there. So you think to yourself, “Why not try? Why not take the risk and succeed?” 

So you invest the rent money and get 2% of your money back the first day. Another 2% the next day and you see your money grow over the next week. You’re seeing the money but you can’t withdraw it yet because you’ve not reached the maturity date yet.

At this point, you’re trying to decide whether your Benz should be black or white. Next thing, you log in to your dashboard and see ‘site under maintenance!’ They have no customer support so you’re stranded. Your money is gone. It is finished.

What just happened? 

Usually, these Ponzi schemes don’t invest your money. Instead, they use your money to pay others who invested before you. Next, they use another investor’s money to pay you, and so on. 

At the end of the day, when more people are withdrawing than depositing, the system crashes. The organizers disappear with any money still in the investment wallet and leave you stranded. 

Look, you’re the boss and we can’t tell you what to do but we can tell you what we think. Based on our experience and how much we care about you, we think that you should shine your eyes. If it sounds too good to be true it might be fishy. 

And if you’re not sure of an investment but still decide to go ahead, then be penny-wise about it. You don’t want to end up pound foolish in this economy ?.

How to Know if your Neighbour’s Latest “Investment” is a Ponzi Scheme

We call these schemes ‘potholes’ because they make the investment journey rough for all of us. But just like you do with normal potholes on the road, you can spot them and swerve.

Most Ponzi schemes share similar features that make them attractive to people. If you spot them, then you can swerve.

  • The profit is unrealistic. Some schemes promise profits anywhere between 1% daily and 100% monthly. To compare, the average stock market return is 10% annually. 
  • Yes, crypto trading offers more than that in many cases but the market fluctuates so it’s hard to be sure of stable profits. Promises with such high stable profits are unrealistic. These schemes also aggressively encourage you to bring more investors and even stop you from withdrawing your money if you don’t. For example, some platforms tell you to bring one person and that person brings two people, and so on.
  • Even when you manage to withdraw your money, they keep disturbing you to reinvest it with them.
  • They don’t explain how they invest your money and there no details of their investments on their website. 
  • Their name or website design is similar to that of another credible company.
  • They don’t have a marketing campaign or visible founders. The only people who market their platform are people who have invested in it.
  • Ponzi schemes usually have no customer support agents that you can reach out to when you have problems. 

If you notice any of the qualities above in an investment, we encourage you to Spot and Swerve. 

We know you want to make more money. It’s normal and we totally get it. But we’d hate to see you lose your money while trying to invest it.

You don’t deserve to lose your money just because you had the guts to invest it. Everyone tells you that you have to take risks if you want to be a good crypto trader. It’s true, but those risks should be smart. 

We’ve also noticed that people think exchanges like ours are associated with these platforms. As we stated in our recent announcement announcement, we are not a subsidiary or in any way associated with any platform that promises constant daily returns on investment.

Although it can be tempting to invest in a shady scheme and cash out quickly. But as some of our customers have told us, it mostly ends in tears. 

You don’t have to go down that road. Instead, you can trade Bitcoin in a legit way. You can also join our crypto community of people who share the same trading challenges and find smart ways to solve them. 


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