The Harsh Lessons Learned from Falling Prey to Ponzi Schemes

As a newcomer to the dazzling world of cryptocurrency, I was captivated by its potential and the staggering profit margins it promised. Initially, discovering that earning 5% monthly—far beyond the annual yields of traditional investments—was not just possible but also relatively common. Then I stumbled upon legit opportunities returning 1% per day and I was hooked, eagerly descending down a rabbit hole in pursuit of ever-higher yields.

The Ponzi Pushers

My quest led me to a Facebook group that  I now refer to as the “Ponzi Pushers.” They marketed themselves as a social group of investors, constantly scouting for “new opportunities”. Their strategy seemed straightforward: jump in, recover your initial investment quickly, and any further profits are just icing on the cake. They rationalised that if an investment failed, it wouldn’t matter since you were playing with “the house’s money.” And of course they pre-warned their community to “never invest more than you can afford to lose”

However, the grim reality was that there was no actual investment—just a classic Ponzi scheme where returns were paid from the contributions of new investors. It became painfully clear that we weren’t dealing with the house’s money but stolen funds. Despite this, many in the group, reaping hefty affiliate fees, turned a blind eye.

The confusing part was that I actually made money from some of these investments. I tested them with a small amount of money, I received a return, I was able to take that money out and pocket the profit. This led to me trusting the platform and putting even more money in. I compounded my returns and now my profits were making profit, it was great. I had never heard of scammers that actually paid you money, I always thought that scammers just took your money and ran.

The Education

They say you pay for your education one way or another, and I was about to pay for it big time. My wake-up call came when three “opportunities” simultaneously collapsed. This triggered a deep dive into my other “investments”, revealing I was entangled in not one, but seven different scams. In a frenzy, I liquidated what I could, closed accounts, and changed passwords. I managed to remove a large chunk of cash and prevent further losses but the damage was done.

Determined to protect myself in the future, I delved into understanding the mechanics of scams. Here’s what I learned:

  1. Unrealistic Returns: If an entity claims to generate exorbitant returns effortlessly, it’s likely a red flag. A legitimately profitable business can secure institutional funding at much lower rates than what they would offer to individual investors. Why pay 3% weekly when they can get yearly funding at 10%?
  2. Excessive Affiliate Fees: Beware of any scheme that offers outrageous affiliate fees (10% or more of money invested) for recruiting new investors. Such high fees are unsustainable and indicative of a scam.
  3. Do Your Homework: Always start with a thorough Google search. Websites like www.behindmlm.com can be invaluable. Be cautious of promotional YouTube videos and do a deep dive into the history and credibility of the promoters.
  4. Identify Ponzi Pushers: Many scammers will delete their past content once a scheme collapses. But do your best to research their history; if every recommended opportunity turned out to be a scam, it’s a clear pattern.

Moving Forward

At the end of the day there is only one reason I got scammed and only one person to blame – myself.
I didn’t follow my own investing rules, I got caught up in the hype and FOMO and went into opportunities I didn’t understand.

Here are my new rules for how I proceed:

  • Investing should be approached with education and thorough due diligence.
    Get to know the people behind the opportunities, check the creation dates of their social media profiles, and look for genuine personal content beyond just investment opportunities.
  • Verify their company’s registration and always start with a small amount.
  • Stick to your investing principles and avoid FOMO
  • Prioritise getting educated. You need to fully understand each investment class and the opportunity that is being presented to you before you invest in it.

This post is not a post about the dangers of investing, far from it, it is a post about the importance of being financially educated, having a clear set of investment rules and sticking to them. Far too many people are looking to “park their money” into an “opportunity” and hope for easy high returns, rather than put their time and effort into learning how everything works, doing thorough due diligence and starting by investing only small amounts of money until the investment is proven.