For the benefit of those unfamiliar, a Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation. The Ponzi scheme usually entices new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent. Perpetuation of the high returns requires an ever-increasing flow of money from new investors to keep the scheme going, until suddenly it disappears.
OK, so how do you make money? Well the easy answer is to get out before the crash, on the basis that while money is still coming in, the organisers are hardly likely to refuse a redemption if that would cause suspicion, so there is a window of opportunity, and this is monitored by specialist websites.
An extensive online ecosystem has developed in support of HYIPs, involving discussion websites, digital currencies, and third-party ‘aggregator’ websites that track HYIP performance. These aggregators list dozens of active HYIPs, tracking core features such as interest rates, minimum investment terms and funding options. They operate forums in which individuals can report their experiences; but more significantly, the aggregators appear to make their own investments in some of the HYIPs and report on when interest payments cease.But as the academics wisely note:
Given that all HYIPs are fraudulent, it is natural to ask whether the reports from aggregators should be trusted. While ascertaining ground truth is impossible, we have devised a number of measurements to assess the relative accuracy of data reported on HYIPs.
One of the websites quoted in the report has already gone offline. It it looked too gopd to be true, it probably was.