What is a Ponzi Scheme A Ponzi scheme is a very widely used term for any type of fraud related to investment, and has come to be very well known across the world. In actuality though it does not represent every kind of scheme, it refers to a specific type of scheme. A Ponzi scheme is based on paying earlier investors with the money of later investors. The head of the scheme will pretend to operate a profitable and reputable business which guarantees impressive amounts in return to the initial investment. Once the ‘business’ gains a few investors, their money is returned by the newer investors whose money return date is yet to arrive. The catch is there is no business or any money being generated and the operator of the scheme is keeping whatever leftover money for themselves. Once investors see a good return, they reinvest and suggest this ‘business’ to acquaintances and so the amounts of money coming in increases making more personal profits for the head of the scheme. Shorter lived Ponzi schemes happen on a smaller scale, and their operator vanishes once he/she has made enough money to be satisfied, leaving their investors robbed and deceived. Those who get greedy and aspire to keep the schemes running longer usually collapse when they are no longer getting new investors and are no longer able to pay any of the ones they already have, and so they are exposed, otherwise their lack of profit declaration while always paying back their clients can arise suspicions to authorities who will in turn make an arrest. In some cases Ponzi schemes can go up to millions and even billions like the infamous case of Bernard Madoff. FxNet Ltd is a global, fully licensed Over the Counter (OTC) online Forex and commodities broker, regulated by the Cyprus Securities and Exchange Commission (CySEC). FxNet is located in Limassol Cyprus. FxNets mission is to reach and retain traders around the globe through exceptional customer service, integrity and continuous innovation that will provide our clients with simple, exciting and secured trading platforms. fxnet/news/hat-is-a-ponzi-scheme
Posted on: Thu, 23 Jan 2014 08:45:57 +0000
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