Smart Contract Ponzi Schemes
Ponzi Schemes have an upgraded version: Smart Contract Ponzi Schemes. It is more challenging for people to identify and pinpoint their operations running under the smart contract code. It is more difficult when the code is open source and immutable, which promotes transparency.
A typical Ponzi Scheme
Ponzi Scheme is an investment fraud that promotes high returns while only a few in the early investment period gain the full investment returns. It highly relies on newcomers to pay off investment gains.
To determine a typical Ponzi scheme event, there are factors to identify from:
- unreasonable high returns with no risk
- short period of consistent returns
- unregistered investments
- over-complicated investment strategies
- investment cheerleaders to push you
- unlicensed sellers to promote investments
- secrecy opportunities to wait for you
- paperwork with errors and false statements
