Sometime ago, I shared a post here on Hive in the Leofinance community with the title, Identifying Crypto Scams & Their Red Flags and I stated five scams with their different red flags to look out for. One of the scams I mentioned is called "Ponzi Scheme".
I have shared a more detailed post about identifying Crypto - romance scam with a lot of signs to look out for when you suspect a romance scam. I also shared another detailed post about identifying Pumps & Dumps with more signs pointing them out. You can check out these contents as they are of good information for us to be wary of various scams going around since crypto adoption.
Image designed with Canva
For this content, I'll be focusing on the scam "Pump & Dump", sharing signs you could find if you're being invoked in an ongoing pump & dump scam. I bet a lot of people both new and old crypto enthusiasts has fallen for this scam in one way or the other, losing little or so much in the process.
What is a "Ponzi Scheme" Scam?
Ponzi scheme is a type of investment fraud that attracts and recruit many clients especially new and untrained investors to make investments.
It was coined after the man who carried out a massive fraud in the 1920s... Charles Ponzi, he promised his clients a 50% profit within 45 days or 100% outrageous returns in three months. He may had not been the one to start this kind of scam as there were some before him but considering how his own lasted for a year, it made this scam popular and named after him.
So in a more simpler explanation, here is how Ponzi schemes work.
The scammers come up with a business plan that could attract investors and as this type of scam would need a continuous flow of money to thrive, the scammers uses the funds they get from new investors to pay their old investors. Since old investors gets their rewards, they tend to stick around for more rewards believing in the scheme and even bringing in more investors to join and earn too like them.
These earning days ends for old and new investors when the scammers begin to find trouble bringing in new investors as the will have no more money to pay their old investors. It will then reveal to be a scam.
How to identify a "Ponzi Scheme" Scam?
For this particular kind of scam, there are a lot of obvious or telltale signs that one is in a "pump & dump" Scam but I'll share only a few here and ask that you research more to know about them. Considering how people fall for these signs repeatedly is still a baffle but we can only keep reminding ourselves that this scam exists and also share tips to help us not to fall for them while making profits and exploring the world of crypto investments. Here are the three good signs it may be a Ponzi Scheme scam:
Investments with little to no risk: First, they come up with investment business that seem like a rocket science to understand especially to one who has never gotten involved with crypto or investment before. And then they go on about you getting high returns with little or no risk. We know well enough how it is with crypto, there are always risk so when you hear there is no risk in investing, it is possible it's a ponzi scheme.
Overly consistent returns: In the world of crypto, there is almost never a consistent flow of profits as the market movements can be very unpredictable. So if you're on an investment program and you seem to be getting your returns consistently and even too consistent, you're to perceive that you've fallen for a ponzi scheme. Because these returns won't come in anymore once the scammers fail to recruit new investors.
Issues with receiving payments: Like many other kind of scam, a lot of these scammers try to convince you into investing your returns and not taking payments until a while to earn even bigger returns. All these are done to pay others who must take their returns and there by, you have issues receiving your payments. It is possible that you've fallen for a ponzi scheme.
There are more to this scam issue, we just have to be careful when we go around the crypto investment world so we don't lose our money to fraudsters. Share your thoughts on this scam or anything you'd love others to know about it.
HPUD Participation
Image from my peakd wallet
I didn't want to write a whole post about my small power up lol. This is just me staying consistent as I can to grow my Hive power. I've been powering up daily and I got the monthly power up badge today. Today, I powered up 16.816 Hive to get my HPUD badge and also to add some Hive to my stake. I recently crossed 10k HP and now, still very far from my goal but it seem very achievable from where I am now.
Keep powering up! Happy HPUD and happy new month to everyone!
