THE notorious ponzi scheme named after Charles Ponzi was applied by him in the 1920s. At that time, this business started as a legitimate one, by focusing on arbitrage. Along the way, the business used investors’ money to make payments to earlier investors and himself.
Irrespective of how the diversion of the money goes, what is perplexing is the high “returns” that is being promised to investors. To maintain such high returns, the scheme will constantly need a steady and strong flow of money. This can only come from new investors.
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