【Fraud Prevention】Can deposit but unable to withdraw? Ponzi schemes promise big profits! - Teach you how to identify scams

Imagine this: in 2015, when the hype around blockchain and cryptocurrencies was lower, a "scholar" who once spoke at The Economist summit vividly described the "future payment system," claiming that she had invented a cryptocurrency that would be used as the unit of payment in the future. Or, in 2018, a sizable Ethereum mining farm was seeking investors for mining contracts (starting at 150,000), promising a monthly return of 3%. This interest rate seemed somewhat attractive yet not too extravagant, and you couldn't find any negative reviews about these projects online. In such a scenario, would you believe them? Would you encourage others to invest as well?

Behind every deceived investor lies a greedy heart.

Both of the above examples are real cases presented in this article, projects that are comparatively more convincing to investors. However, even schemes with clear signs of pyramid selling still managed to attract a large number of investors eagerly offering their funds.

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In reality, such projects are easily identifiable. Let's delve into the mechanisms of these Ponzi schemes that promise risk-free profits, the elaborate packaging, and the persuasive rhetoric that captivates countless investors.

Note: Before engaging in any suspicious investments, please call【Anti-Fraud Consultation Hotline 165 of the Criminal Investigation Bureau】 for relevant inquiries:《What to do if you've been defrauded? Call the world's first Anti-Fraud Consultation Hotline 165》

Scam Methods, Characteristics, and Tactics

1. XX Seminar

Usually, these seminars and presentations exhibit several enduring characteristics:

• Accompanied by grandiose music
• Content boasting easy and quick returns
• Skilled at creating an atmosphere, getting members emotionally charged
• Members testify to making a fortune
• The speaker looks impressive, and even after googling, it's hard to find out who they are

Most investment scams operate in a non-public, secretive manner, using the atmosphere created on-site to make investors commit on the spot,leaving no room for fact-checking.

With the advancement of the internet, these rat-like seminars are becoming less common, mostly conducted through Facebook groups,LINE, Telegram, and always in private groups or through private messages. So, remember,never consider investing in projects messaged by strangers.

2. Mysterious Source of Profit

When it comes to cryptocurrencies, keywords like smartXXX, AI, programs, etc., are frequently used in scams, such as smart wallets, AI trading, smart transfers, programmatic arbitrage, and more. It seems that as long as a name has "smart" in front of it, it can solve all trading and investment problems, but the fact is there is no such automated trading system, and they have no "business model,"the source of profit is simply the money in your pocket.

We will talk about the issue of investment returns later. If such a system can really provide such high returns, they would directly seek cooperation with venture capital institutions instead of posting on Facebook and messaging individuals to invest three to five thousand dollars one by one.

3. High Returns, Guaranteed Profits, Multiplying After X Times

The person trying to lure you into the scam keeps emphasizing guaranteed profits, but as the saying goes, nine out of ten investments fail. Is this promoter (project party) a one-in-a-million investment genius? And does he know how much the coin will multiply in a few months? No one in the world knows how much a financial product will multiply in the future.

Even the contemporary investment legend –Buffett, suffered significant losses during the COVID-19 pandemic and has lagged behind the S&P 500 index in recent years, meaning he couldn't outperform the market. If these fund projects were so capable, the world would owe them a Nobel Prize in economics.

4. Dynamic and Static Income

Usually, any investment project with this mechanism (bonus name) should not be considered at all

"Static income" means that you invest money and receive fixed returns every month or at specific intervals without needing to do anything to earn it. Of course, the project party or your promoter will sugarcoat it, saying things like: you can put in money, and it's okay if you don't "recommend friends," you can quickly recoup just by receiving static income.

"Dynamic income" refers to the bonuses received by "pulling downlines." This reward is on a completely different level from static income. You may only need to recruit three or four friends and family members to instantly recoup your investment. This varies depending on the system of each project and is a key factor in the exponential growth of the total amount of funds attracted by fund projects.

5. Up and Downline Mechanism

Continuing from the dynamic income, this also echoes the "mysterious source of profit" mentioned earlier. Taking "PlusToken" as an example, it is clear that there is no "smart brick movement" mechanism at all. Your profits come from the funds of the next investor, commonly known as "robbing Peter to pay Paul."

As shown in the diagram, the multilevel marketing mechanism has ten levels, meaning you can recruit at least ten downlines, and you can earn a share of the profits from these ten people. The most exaggerated part is that the first layer of profit sharing is 100%, meaning you can take as much as your first downline earns each month. This is likely the biggest incentive for recruiting at least one person.

Furthermore, "PlusToken" registration is based on a mobile phone number. Users in Taiwan can register twice with one number, allowing them to "self-refer" to receive the first-layer profit of 100%. This is also very unreasonable. Assuming you only invest the minimum amount of $500, even if you self-refer, the invested funds remain at $500. However, due to the first-layer 100% profit sharing, the profit is doubled. Where does this money really come from?

The following are curated cases of actual scams that have been confirmed and investigated, including local Taiwan scams and well-known international fund projects.

FaniTech

• Duration: 2018 – 2019
• Total Funds Raised: Over NT$ 1.7 Billion
• Mainly Promoted "Ether Mining Contracts"
• Had a Scaled Physical Mining Facility
• Investment in mining returned 3% in New Taiwan Dollars monthly

FaniTech, located in Taoyuan, is a "real operational Ether mining facility," which may be the primary reason it can gain investors' trust more effectively. Currently, setting up a mining rig on your own requires not only relevant knowledge but also high costs, making it difficult to recoup the investment even with the generated coins covering the electricity expenses.

At this point, an "Ether mining contract" may have an inexplicable appeal to investors. It doesn't require purchasing mining rigs or even understanding what Ether is. Just entrust the capital to FaniTech, and every month it will return in New Taiwan Dollars, completely bypassing the need to handle cryptocurrencies.

According to the Taoyuan District Prosecutors' Office investigation, after the couple named Tian established the "FaniTech Technology Company," they attracted over NT$ 1.7 billion in investments in two years, with investors from all over Taiwan. In May last year, the mining facility was deserted overnight, and after police intervention, 13 individuals from the company were handed over to the district court for trial.

OneCoin

• Duration: 2014 – 2017
• Total Funds Raised: Approximately NT$ 135 Billion
• Promoted as the "Bitcoin Killer"
• Numerous High-Profile Individuals Involved
• Investors Solely Profit Through Multilevel Marketing

One of the most famous Ponzi schemes globally, founded by Ruja Ignatova, known as "Dr. Ruja," the setting at the time was like this:

Blockchain discussions were less prominent, and Bitcoin was about to undergo its second halving. At a time when a cryptocurrency doctor who had previously spoken at "The Future of Payment" at an Economist summit, in the Wembley Stadium that once hosted the 2012 Olympics, presented a revolutionary and disruptive cryptocurrency "OneCoin," claiming it would be the future medium of payment. The attendees were highly educated or high-end knowledge workers who had worked at McKinsey. Under such circumstances, would you believe her?

Additionally, it included being featured on the cover of "Forbes" in 2017.

In 2-3 years, Dr. Ruja made 4 billion euros, and in October 2017, after boarding a flight to Athens, Greece, along with the huge sum of money, she disappeared. Her brother Konstantin Ignatov was arrested in March 2019. The FBI, which intervened in the case, described it as "Wall Street meets MLM."

PlusToken

• Duration: 2018 – 2019
• Total Funds Raised: 20 – 30 Billion USD
• Claimed to Use Brick Moving and Quantitative Arbitrage
• Profits Through Daily Dividends and Multilevel Marketing

PlusToken was introduced in 2018 in the midst of a cryptocurrency market downturn, and even if you didn't refer others, investors received a 10% monthly dividend. Although it only lasted a little over a year, the astonishing speed at which it attracted funds globally exceeded 20 billion, with some reports claiming its total funds exceeded 30 billion USD.

Furthermore, while "PlusToken" was not the first project to use "smart brick movement" as a gimmick, it was the first to become significant. Unlike other projects, "PlusToken" did indeed show returns monthly and allowed daily withdrawals, making it easier for investors