Ponzi Scheme

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Ponzi Scheme

What is Ponzi Scheme

A Ponzi scheme is a fraudulent investment scheme that entices investors with high rates of return and little risk. A Ponzi scheme is a fraudulent investment operation in which money is collected from later participants to pay returns to earlier investors. This is comparable to a pyramid scam in that both rely on new investors’ money being used to reimburse the previous funders.

When the influx of new investors stops and there isn’t enough money to go around, both Ponzi schemes and pyramid schemes finally hit their bottom.

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