This scam scheme involves fraudulent investment operations where returns are paid to investors from money deposited by subsequent investors, rather than actual profits from a company’s operations. In reality, the scammer does not invest the money received but pockets most of it. The scammer may also make it appear like great returns are being generated by using the remaining funds obtained from new investors to pay earlier ones.
Knowing and being able to recognize the telltale signs of a Ponzi scheme is important to protect yourself from such scams. In short, some warning signs of a potential scam include: investment opportunities that promise high returns with little to no risk; investment strategies that are vague or secret; programs promoted on social media or messaging platforms; and programs that offer referral commissions or limited-time offers.
Under Section 415 of the Penal Code of Singapore, “cheating occurs when a person fraudulently or dishonestly deceives the victim to deliver property or money to any person, or consent that another person retains his property or money“. This scheme that ensures high returns for the first lenders, but only thanks to the immediate use of subsequent payments that fall into the network from marketing
A rumour circulated in Singapore early March 2022, that a little-known investment manager was apparently delivering an astonishing 15 per cent quarterly profit to anyone who invested with him, by trading nickel early this year. As word spread, more Singaporeans clamoured to give their money to the investment manager, a 34-year-old ex-accountant named Ng Yu Zhi. Funds within Ng’s Envy Group soon raised almost S$1.5 billion (US$1.1 billion) from hundreds of clients. Ng seemed to be making good on the hype, returning steady gains quarter after quarter and giving every appearance of great success, with a mansion in one of Asia’s most expensive neighborhoods, a 126-foot yacht and a fleet of luxury cars.
An Ontario Securities Commission report in June 2020, found that QuadrigaCX, believed to be Canada’s largest cryptocurrency exchange, was a Ponzi scheme after millions of dollars disappeared following the apparent death of founder Gerald Cotten. It emerged that Cotten had operated multiple accounts under aliases that were credited with fictitious currency and crypto assets balances to make up shortfalls with other client deposits after he ran into trouble following a fall in the price of crypto assets.
Another investigation of this Crypto Raggioro has been targeted by New Financial Technology ltd, a Treviso-based company based in London. The company attracted investor clients by promising 10% returns on the alleged availability of an algorithm that would generate profits from trades made on crypto trading platforms. Thus, 100 million euros disappeared in the virtual universe, leaving about six thousand deceived customers with the palm of their nose.
How to Avoid Ponzi Scheme in Singapore?
Always check that the firm is authorized to provide financial investment services through the Monetary Authority of Singapore (MAS) Financial Institutions Directory.