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What are Ponzi schemes?

There have been many attempts to operate Ponzi or pyramid schemes (a.k.a. high-yield investment programmes or HYIP), which are deceptive practices that appear to promise high rates of return. However, the early payouts are made with money received from new people joining the scheme, which makes the scheme unsustainable because no real economic value is being created. Consequently, the schemes inevitably collapse with most participants incurring a total loss of their money. See www.sec.gov/answers/ponzi.htm for the history of Ponzi schemes. Information about pyramid schemes is provided at www.sec.gov/answers/pyramid.htm.