Named after Charles Ponzi of New York City, early investors are paid out with funds from later investors. This gives the illusion that the early investors are succeeding and that the scheme works therefore encouraging more investors to join or reinvestment. Some of the most elite and brightest people on the planet fell for Bernie Madoff’s scheme including politicians, Hollywood stars and banks, including HSBC, Banco Santander and Medici. The estimated total losses are 64.8 billion dollars. That’s a figure of 64,000,000,000.00 to show the number of zeroes. Sorry, I missed a figure there – there is another 800,000,000.00 to add to that. These are only Madoff’s estimated losses, the true figure will never be known but is considered to be significantly higher.
To put this into context, at the time of writing, Bitcoin’s market cap is 70,265,745,646.00 Ethereum is 14,336,869,085.00 and XRP is 12,761,473,347.00. Bernie Madoff stole almost as much money as is invested in all of Bitcoin today.
With the history lesson out of the way, let’s review how some of the ways that these schemes operate. Always bear in mind that these schemes are designed to make you part with your money. They will all use similar tactics, offers and promotions to get you to send them your money. The language they use in their pitch is designed in such a way that you begin to convince yourself that this is all real and you have the ‘Golden Ticket’. There is a formula that is used to prey on people’s vulnerabilities, emotions or greed.