Ponzi SchemeBack to Glossary
Named after the infamous Italian con artist, Charles Ponzi, a Ponzi scheme is a fraudulent investment scheme that entices investors with the promise of high rates of return. In reality it’s the funds of new investors that are used to pay earlier investors. Ponzi schemes can carry on running and generating returns (particularly for early investors) as long as new money keeps coming in and as long as investors don’t request to withdraw all of their capital at once.
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