Snake Oil, Ponzi Schemes and Crypto Scams

With great computer-generated graphics and fancy websites, online companies would claim to be the most Trusted Digital/Crypto Currency and Forex Trading Platforms purporting to have most advanced  proprietary Artificial Intelligence (AI) technology, systems capable of assisting their professional and crop of omni-directional expert traders  to wisely use your money, invest and trade and make abnormal profits on your behalf.

Impostors masquerading as business gurus, they with their sweet talk, will lure and entice unsuspecting people into believing that those companies are able to generate and provide between 2 to 50% passive Return On Investments (ROI) along with an eye-catching affiliate program ranging between 5% to 25%. Online Referral materials, codes and referral links will be provided for Peer to Peer (P2P) and online marketing, advertisement and desirable social networking platforms.  People are encouraged to “make a deposit and sit back while our experts do the work” and “let our professionals help you choose an investment plan that meets your needs”.  The promise of passive income, profits, bonuses, equity and shares in companies is the order of the day.

They claim that their main business is Cryptocurrency and Forex trading with future expansion across various sectors without mentioning or specifying them and when. Their so-called engineers, financial experts and self-learning bots will design accurate trading plans to meet customer profit requirements every day. “You are able to earn money without leaving your home, and what’s more, without making any risky decisions claiming to have developed a system that guarantees constant passive income in several investment plans”. Claiming to be located in Big Cities like London, New York, with a workforce “with great experience and trading skills in all international markets, using professional, advanced tools that are not available to average users “because the profit is guaranteed for investors”. Blockchain and allegedly transparent and audited smart contracts are peddled to would be investors. The sweet nothing stories without any product or service offered by these online companies except “recruiting other people to join with their own money” continue like that.

Unfortunately, a lot of people from all the continents have been duped and continue to be duped in that manner. They have cried and others still continue to cry. I personally know several people who reached out to the Bank, borrowed USD $60,000.00 equivalent and “invested” in these cryptocurrency scams and never recovered any cent. Sadly, the loan repayment continues for the next 5 years.

As I went out jogging in the neighborhood today, I thought of “Snake Oil” and Charles Ponzi Schemes in one sentence.  Not a great feeling. I decided to share this with you.

Ponzi and Pyramid schemes

        Dr. Joseph T. Wells’ Encyclopedia of Fraud, Third Edition aptly describes the characteristics of a Ponzi scheme. A Ponzi scheme is an illegal business practice in which a new investor’s money is used to make payments to earlier investors.

        In accounting terms, money paid to Ponzi investors, described as income, is actually a distribution of capital. Instead of returning profits, the Ponzi schemer is spending cash reserves, all to raise more funds. Where a basic investment scam raises money and disappears, the Ponzi scheme stays in business by circulating investor funds.

There are usually little, cryptocurrency, trading, IPO, FOREX trading or no legitimate investments are taking place. Promoters used most of the funds for expensive lifestyles and transferred into property or offshore accounts. Schemes typically run for at least a year, although some Ponzis have flourished for a decade or more.

       The Better Business Bureau has labeled Ponzi-style financial rings “the biggest single fraud threat confronting American investors.” Highly publicized nationwide booms in real estate (the 1980s) and the stock market (1990s) gave rise to an epidemic of investment fraud. Every one of the top frauds cited by the North American Securities Administrators (including Internet and other high-tech scams, telemarketing, and abusive sales practices) has been run as a Ponzi scheme. According to the Securities Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA), scammers pitching phony securities cost United States investors between $10 and $15 billion a year. This is more than a million dollars an hour. Many of these scams use the Ponzi method – paying off a few early investors with other investors’ money under the guise of stirring up business. Telemarketing boiler rooms, whose frauds cost an estimated $40 billion a year, often run Ponzi schemes. 

      The Encyclopedia of Fraud details the “The Federal Trade Commission (FTC) and the SEC are the U.S.’s two major enforcement organizations that target Ponzi schemes. Federal jurisdiction privileges allow FTC and SEC agents to pursue scams across state borders. For example, an operation may be incorporated in Florida, sell most of its products in Louisiana and bank its profits in Tennessee. Prosecuting has to encompass each venue and relate local activities to the larger scheme.

       “The SEC files about 500 complaints a year against unscrupulous investment promoters, and 25% of those are Ponzi schemes. However, the largest number of Ponzi scheme complaints are filed on the state level by state authorities, including attorneys general and state-level regulatory agencies. The FTC shuts down about ten pyramid schemes every year and takes action of one form or another against dozens of bogus investment opportunities. While the SEC can pursue civil and criminal complaints, the FTC’s powers are limited to civil remedies, usually an injunction and a financial judgment for investor losses.” 

      “A Ponzi scheme and an illegal pyramid scheme both use new investors’ money to pay earlier investors. The difference between the two lies in the way each scheme is promoted. Illegal pyramids generate revenue by continually recruiting new members. The promoters may offer merchandise or services for sale—or may not—but the only significant revenues come from recruitment. Though a pyramid-style compensation plan is not illegal, it is illegal to run a business in which recruiting new people generate all of the funds.” . The notorious so called uplines and downlines, referral links by fake leaders

In his book Frankensteins of Fraud, Wells writes the history of Charles Ponzi and how his scheme became a well-known, remarkably enduring fraud of modern times. “Known as the Father of the Ponzi scheme, Charles Ponzi, or Carlo Ponzi, was born in 1882 in Parma, Italy. He came from a family of hoteliers and was sent to Rome for a university education. But a string of gambling debts and criminal charges for theft and forgery cut short his schooling and prompted his family to send him to America. At the age of 19, he arrived at Boston Harbor. In his self-published autobiography, The Rise of Mr. Ponzi, he claimed that he had only $2.50 with which to begin his new life. He had left with $200 in cash from his family but lost the greater part by gambling with some of his shipmates.”

        After working odd jobs, Ponzi was employed as a bank clerk in Montreal, where he began handling international wire transfers. Ponzi began stealing immediately, was arrested and served time before eventually making his way back to Boston. There his plan took shape, as Wells explains:

“Ponzi hatched what would become known as the Ponzi scheme in December 1919. A coalition of international postal services had begun selling postal reply coupons after World War I ended. Each coupon was good for one stamp in any of the affiliated countries; this allowed the mail services to continue operations smoothly despite the instability of most European currencies at the time. Ponzi reasoned that he could persuade investors to capitalize on the fluctuating currency prices by using the postal reply coupons in a series of exchanges.”

        Instead of making legitimate trades, Ponzi “used money from his latest round of investors to pay those who had purchased his ‘securities’ earlier. By convincing people to reinvest their funds, he was able to postpone his financial obligations even longer.” Wells writes that newspaper reports in 1920 exposed Ponzi’s scheme, and despite his claims of innocence, “a federal audit confirmed his operation was bankrupt, owing perhaps $4 million or more to investors.”

         Wells describes the rest of Ponzi’s life as one of a fugitive and swindler. “After his arraignment, Ponzi jumped bail and fled to Florida, where he sold swampland as an investment property. He and his wife Rose were both arrested in Jacksonville in 1924 and charged with fraud. The charges against his wife were dismissed, but Ponzi was ordered to stand trial. However, an errant judge, not realizing he had one of the country’s most infamous swindlers before him, allowed Ponzi to post bail. He fled on a ship bound for Genoa, Italy. Authorities later apprehended him when the ship docked in Houston, Texas. Ponzi was convicted in federal court in 1925 and sentenced to 5 years imprisonment. After serving three years, he was turned over to the Massachusetts judicial system, which sentenced him to seven more years.

          “Though he fought the deportation charges against him, Ponzi was forced to return to Italy in 1934. Frederico Mussolini, who was eager to hear how his countryman had wreaked such havoc in the American financial system, received him warmly. His family connections eventually won him an appointment as the business manager to an Italian airline headquartered in Rio de Janeiro. He lost the position when it was discovered that the airline was being used to smuggle diamonds, strategic materials, and spy communications to the Fascist regime. Ponzi was innocent, later expressing his consternation that he had not been recruited into the effort.

        “Sometime in the 1940’s he paid a small press in Brooklyn, New York to print his autobiography, The Rise of Mr. Ponzi. Extant copies are available at the University of Texas and the Library of Congress, but the book was never reprinted. Charles Ponzi died penniless in a charity ward outside of Rio in 1949.”

       No doubt Charles Ponzi’s story casts a long shadow on fraud. People still remember the name “Bernard Madoff” in the USA. As investigators sorted through the financial mess that resulted from Madoff’s massive fraud, Ratley shared some advice for fraud examiners working to sniff out the next Ponzi scheme:

“Never judge the suspected fraudster by your own standards,” Ratley said. “They will do things that would appear absurd to the trained professional. If you think, ‘they wouldn’t do that,’ get that thought out of your mind. It’s your job to investigate, verify and confirm all of the facts where fraud is involved.”

Photo by Anna Nekrashevich on

To all our business partners and colleagues, become aware that we ALL need to protect our Hard-Earned money from Online Scammers, impostors masquerading as proving best Investment Platforms with their suspicious Investment platforms and fancy looking but deceitful  websites. Before you invest in any platform, kindly carryout your own thorough due diligence. If you are unable to, please get in touch with us, we will be able to assist you in reviewing the so-called investment company and check a lot of other salient details. For now, be aware of the following; Beware! Beware!! beware!!!


1. Timex Trading, 2. Gold Sphere Limited, 3. Wiseling, 4. Zentas-coininvest, 5. Fx-investors, 6. Lorex, 7. Coininvest, 8. Medtech, 9. Medcare, 10. Taskpays,11. Btcflash,12. Coinsoro, 13. Milenuim,14. Chy Mall, 15. Ezifun, 16. On-sitgain, 17. Tobacco investment, 18. Crypto antre, 19., 20., 21., 22. Bitcoinforever, 23. Maxdrezel, 24. Polish trade, 25. Fastbittrade, 26. XTD,

 27., 28. Cryptodailyexchange, 29. Milobitcoin, 30.Legit manner, 31.Blockficapital, 32. earnings, 33. *Malina-fruit*, 34.; 35., 36., 37. Stockcent, 38 Abasco, 39. Falcon capital, 40. Fidle capital, 41. OIS, 42. Slushtrade, 43.Britminingpool, 44.,

45. Earn Media by Martin Sizwe Zulu, 46. Investgreen ltd, 47. Goldstoneminers, 48. Bitpalminers, 49. Bitgain, 50. Cryptochrist, 51. Ifxgem, 52.

53. CyberCapital,, 55.cionworld, 56. Twindax,

57. Jocial International, 58. Q-net, 59. The Royals, 60. Watermine, 61. Cryptostair,

62. Seawest, 63. Stock trade exchange 64. RailCycler 65. DIEM, 66. and other CRYPTO AIRDROP BOTS .

You may wish to ADD more and share your personal experiences.  Many Thanks and kind regards. Stay SAFE and be blessed.

Published by Kemman

Regulatory and Independent Consulting Professional with expertise in Financial Crime Risk Compliance encompassing Anti-Money Laundering (AML), Countering Terrorism Financing (CTF), Anti-Bribery & Corruption (ABC – FCPA & UKAB), Global Trade & Sanctions, Bank Secrecy Act (BSA), Know Your Customer (KYC) and Customer Due Diligence (CDD), Internal Audit Testing, Reviews, Validation, Risk Assessment. Worked in Asia, Africa, Europe, the Middle East, North America (USA). Banking & FinTech, Anti-Sex & Human Trafficking Advocate, FOREX & Cryptocurrency trading, Travel & Tours, Telecommunications & Energy.

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