whether they are simple models such as the “Loom of Abundance” or more elaborate like the Terra UST stablecoins, they all put money as the starting point. In fact, even the most professional investor can fall into the trap if he is attracted by the “reward”.
It should be clarified that it is a fraud in which the scammers get interest through the invested money of other people. This system only works if the number of new victims grows, as a chain.
5 Ways to Tell a Genuine Investment From a Ponzi Scam
Understanding the risk of high returns
If we understand that offers are always based on exorbitant profits, we must avoid tempting ourselves with a return higher than the reference rates.
Before investing in a project, you will have to know the level of interest rates paid by the safest assets in the market. They are known in the financial world as “Benchmark”.
Still, it is important not to rule out any investment that offers higher returns than the benchmark. A smart investor does not avoid risks, but learns to manage them. Look for those assets forgotten by the market or misjudged and undervalued.
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Discard investments that promise “safe returns”
risk-free returns they do not exist. In this sense, all money invested entails risk to a greater or lesser extent.
If they offer you “guaranteed profitability”, we suggest you hesitate. This is an irresponsible promise, so it should be avoided immediately without the need to study the case.
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Inquire about the origin of the profits to be distributed
These formulas are based on the large profits paid to their older investors because the business “works perfectly”. However, these payments are only possible thanks to the contributions made by new investors who enter the fraud.
If people realize this, two scenarios can be unleashed: on the one hand, there is a rumor that it is a scam and many investors ask to withdraw the money at the same time (endogenous reason); on the other, the economic situation is suffering and new investors cannot be obtained, so the pyramid of scams it collapses and the ruins remain (an exogenous reason).
Profits
Put unregulated investments under the microscope
Regulations are made by state agencies that carry out a study of the projects to determine if the source of returns is genuine and not. Otherwise, they may determine that it is a scam.
The SEC in the United States or the CNV in Argentina are some of the important organizations.
In the case of cryptocurrencies, it is a market that regulates itself efficiently in some areas and not so much in others. Therefore, from here we always recommend not to invest more than 5% of the capital. In search of very high returns, the investor should only allocate money that he is willing to lose in its entirety and with a long-term horizon.
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Make partial withdrawals knowing that it is also not a guarantee
In case you want to access the performance promised by the project and be obliged to constantly reinvest the interest it generates without making any partial withdrawal, we recommend that you do not accept these types of conditions.
The ideal is to make withdrawals from time to time, to analyze the money manager, who, later on, could scam us anyway.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
