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LogoutA Ponzi scheme is a deceptive investment plan that promises large returns with minimal risk to investors. A Ponzi scheme is a type of investment fraud in which money is stolen from later investors to pay off previous investors. This is comparable to a pyramid scam in that both rely on new investors’ money to pay back previous investors.
When the influx of new investors slows up and there isn’t enough money to go around, both Ponzi and pyramid schemes inevitably collapse. The plans start to fall apart at this stage.