What exactly is Ponzi scheme?

Ponzi scheme is the name of investment fraud in the financial field, the originator of pyramid schemes, and is used by many illegal pyramid schemes to collect money. This trick was invented by a speculator named Charles Ponzi.

Ponzi scheme is also called "robbing Peter to pay Paul" and "empty gloves and white wolves" in China. In short, it is to use the money of new investors to pay interest and short-term returns to old investors, thus creating the illusion of making money, and then defrauding more investment.

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A story tells a Ponzi scheme.

Zhang wanted to get rich overnight, but he didn't want to hear that there was a stone on the mountain behind the village that could be made into a work of art and sold for a good price, so he moved his head. He made this idea into a project book, set up a company, took a tall name, invested a small amount of his own funds, and then began to ponder how to raise money. In order to attract others to pay, he showed four unique tricks.

First, the threshold is one yuan lower;

Second, the high-return annual rate of return is very attractive;

Third, the main guarantee of safety commitment;

Fourth, the investment cycle is short, and it can be paid off in one month.

No one dared to vote at first, but they couldn't stand Zhang San's overwhelming publicity. Some people think, why not try? First, pay a thousand dollars. Anyway, if you lose it, you have to pay the tuition, so someone started giving it to Zhang.

Zhang San took his time. A month later, Zhang San paid the promised return on time and exposed the new product online. So those who tried to invest 1000 yuan began to invest 10000 yuan, and those who were afraid to invest at first began to invest in 800 yuan. After several months of circulation, Zhang San finally earned enough reputation, and the company became popular on the Internet. Zhang San himself has also become an internet celebrity.

It's just that if the project is not put into production and there are no products, what will Zhang San take to pay the investor's return? Zhang's idea is simple. Borrow new money to pay off old debts. As long as new funds keep coming in, the capital chain will not break, and this myth will continue. More importantly, as more and more people get high returns, it will have a money-making effect and stimulate the restless hearts of onlookers. The money-making effect spreads rapidly through the network, resulting in an accelerated effect. The amount of new financing each time will far exceed that before, thus ensuring that the previous investors will get a return.

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Zhang San's practice is like blowing bubbles. Zhang Sanhua invited some famous scholars to hold a seminar on a new business model at a large price. Zhang San instantly became a model of financial innovation and industrial innovation. Zhang San tried his best to maintain good relations with various government departments, so the relevant departments strongly recommended Zhang San's enterprises as representatives of the Internet.

From this, all participants are convinced that this is a good project and a major event that can change the entire industrial ecology. There are beautiful bubbles floating in the air, and everyone is enjoying the feast of bubbles.

But the bubble is a bubble after all, and it can't stand the wind and grass. Some investors came to visit Zhang San's magical project on the spot and felt uneasy after the inspection. The mountain is still the mountain, the stone is still the stone, and there is no golden artwork. These busybodies further discovered that Zhang San did not produce or sell any products.

So, how did Zhang San return to investors? Finally, someone realized that Zhang San was borrowing the new and returning the old, playing Ponzi scheme! When the news spread, investors came to Zhang San's door one after another and demanded to redeem their investment. This panic, like the original money-making effect, is getting bigger and bigger, and Zhang San's capital chain is finally broken.

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The harm of Ponzi scheme

Compared with ordinary financial fraud, Ponzi scheme has more victims, wider influence, deeper harm, stronger concealment and greater social harm.

First, there are many victims. The inherent pyramid-shaped investor structure of Ponzi scheme and the pyramid-selling method of cheating and wooing the offline determine that the victims must reach a certain scale in order to effectively maintain the cash flow required by the scheme. Therefore, the victims of a typical Ponzi scheme are often numerous.

Second, the amount of fraud is huge. The initiators of Ponzi scheme never thought about repaying the investment principal, so they never worried that the amount involved was too large, and scammers thought that increasing the amount of funds raised would help to enhance their popularity and attract more investors to participate. Therefore, under the accumulation of snowball effect, the amount involved in Ponzi scheme is often higher than that of general financial fraud.

Third, the social influence is wide and has many levels. The number and scale of Ponzi scheme determine that its social influence far exceeds that of ordinary fraud cases. Its influence level is diversified, including government officials and celebrities, financial investment practitioners, ordinary people and retirees with low risk tolerance, which has caused serious social harm. If it is not handled properly, it is likely to endanger financial stability and social order because of public opinion.

The fourth is to endanger investment confidence and financial stability. In view of the influence and harmfulness of Ponzi scheme, confidence in investors is fatal. After every Ponzi scheme, it always takes a long time to repair the damaged financial order, and it is even more difficult to restore investors' investment confidence overnight. Taking Madoff's fraud case as an example, a large number of financial institutions were involved, which led to the customers of financial institutions losing trust in financial institutions, triggering a large-scale chain lawsuit and adding new injuries to Wall Street, which has been hit hard by the financial tsunami.

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How to avoid Ponzi scheme?

The attractive method of Ponzi scheme is actually not clever. The simplest and most attractive way is to promise investors a high return.

First of all, investors should learn and cultivate a regular understanding of investment.

Ponzi scheme has many loopholes in the anti-investment law: low risk, high return, almost unaffected by the investment cycle and so on. Investors can find these abnormal characteristics after careful screening, but most investors usually don't care about the investment list, analysis process and profit path, they only care about the final profit and loss of investment, thus providing opportunities for criminals.

Second, investors should establish a sense of risk prevention and management.

Investors must realize that no investment is completely risk-free. Investors should, as far as possible, choose qualified financial institutions under the supervision of regulatory agencies to invest. Before investing, investors must effectively identify and evaluate the risk factors they face, classify the risks and take effective risk management measures. When risks break out, evidence materials and funds and property should be kept in time to avoid the expansion of losses.

Third, investors should know as much about the company as possible and pay attention to details.

Investors can judge from the platform official website first. Generally speaking, if the website interface of a platform is rough, and the information introduced is not detailed, or the office address does not exist, etc. Pay attention to this peer-to-peer lending platform.

Secondly, it can also be identified by the operating mode of the platform. In terms of bidding: the platform that frantically issues short-term bidding or announces long-term stop bidding is likely to be a problem platform; At the same time, a platform in peer-to-peer lending suddenly raises interest rates, withdraws cash slowly, and frequently changes office locations.

What's more, the capital flow of the platform is opaque, and investors can't check the capital trend of the platform in time. Without investor discussion groups, such online lending platforms are likely to be Ponzi schemes.

Related Q&A: What is Ponzi scheme? Ponzi scheme is the name of investment fraud in the financial field, the originator of pyramid schemes, and is used by many illegal pyramid schemes to collect money. This scam was invented by a speculator named Charles Ponzi. Ponzi scheme is also called "robbing Peter to pay Paul" and "empty gloves and white wolves" in China. In short, it is to use the money of new investors to pay interest and short-term returns to old investors, so as to create the illusion of making money and then defraud more investment. Charles Ponzi was an Italian-born speculator who lived in the 20th century. 1903 immigrated to the United States. 19 19, he began to plan a conspiracy to trick people into investing in a non-existent enterprise, promising investors a 40% profit return within three months, and then. Ponzi successfully attracted 30,000 investors within 7 months due to the rich returns of the early investors. This conspiracy lasted for a year, and only those who were carried away by interests woke up, and later people called it "Ponzi scheme".