Ponzi Scheme

A Ponzi scheme is a fraudulent investment or scam that promises exceptionally high returns and minimal risk to investors. The scheme typically operates by using funds from later investors to pay profits to earlier investors. The illusion of profitability is often created by making earlier investors believe that the profits come from legitimate business activities. Ponzi schemes eventually collapse when new investments decline, as they heavily rely on a constant influx of funds. It is important to note that Ponzi schemes are distinct from pyramid schemes, although they share similarities.