Ponzi Scheme

A popular term for describing deceptive investment schemes where investors lose all their money after a time.

A Ponzi scheme is a popular term used to describe dishonest investment opportunities and schemes. Such schemes are often characterized by overly high return on investments and hazy methods of business operation. However, because the potential profits are high, many new investors commit themselves financially and usually end up losing most or all of their funds. This loss often comes after the founder of the scheme disappears with investors’ funds or applies for bankruptcy.

Ponzi schemes were named after an Italian swindler from the 1920s, Charles Ponzi. He duped many different people with his schemes and inadvertently developed the framework for these kinds of cons. Cryptocurrency skeptics often describe it as a ponzi scheme that will eventually collapse.