The Ponzi Scheme Has Now Moved To Cryptocurrency Trading Sites

Whether you know it or not, you are probably familiar with a ‘Ponzi Scheme’. If you’ve ever seen films like Wolf Of Wall Street or Runner Runner, then you will have come across two very high profile examples of it. We’ll explain in more detail what it is and how to avoid being the victim of one (which unfortunately isn’t always easy) otherwise you may end up needing the help of investment fraud lawyers to try and get some or all of your money back.

What Is A Ponzi Scheme?

A Ponzi scheme in its simplest terms is a person or people who steal from the money they are holding for customers. It comes in many different guises but is most commonly found in the trading world where people invest their money. Let’s say a new investment company starts up and 10 people invest £1,000, the total fund is now at £10,000 so providing people keep their money in there, there is effectively a bank account with £10,000 which is supposed to be invested but might not be. The owner of the company could take £1,000 of that for themselves and then providing all 10 people don’t want to withdraw their money at once, nobody is any the wiser.

For fraudsters to make real money though from these schemes, they need it grow, the bigger it is the more money there is and the less chance there is of everyone wanting to take their money out at once. Normally, when a Ponzi scheme starts up they grow it by promising much bigger returns than other investment funds, sometimes double or triple. People will be sceptical and invest a bit of money that they can afford to lose but instead of losing it they will get back £1,300 on their first £1,000 investment which they will be able to withdraw and be very happy about. They will then tell other people about the fantastic returns and as the fund grows the money will scale up, the returns will grow and the person who owns the fund will be taking more and more of the customers money. Eventually however the day will come where there isn’t the money left to let people withdraw their funds and this is when it all comes crumbling down with many people losing part or all of their savings.

How Is It Applicable To Cryptocurrency?

Traditionally Ponzi schemes were mainly run in the stocks/shares trading space, they then moved to online gambling sites, particularly poker sites where people who have a large stash of money they’d won and were keeping in there to play with. Recently they have now moved to cryptocurrency trading sites where any money held in your wallet is effectively in the owners pocket until you withdraw it.

What To Do If You Are The Victim Of A Ponzi Scheme

If you feel you may have been the victim of this then it is both a civil and criminal case so report it to the police immediately. The next step to try and actually get your money back is to find cryptocurrency scam recovery specialists who can set about the task of trying to get part or all of your funds returned.