The Passive Investment Scam

Ever been minding your own business and then some random slides into your DM’s with a pitch for some sort of Passive Crypto Investment Opportunity?

You know the ones I am talking about; you buy some sort of investment package for say $299 and your investment gets locked up for 180 days and you receive 1% interest every day by means of there “unique trading algorithm” or maybe it’s a “cloud mining service”.

They will often use words like blockchain protocol, smart contracts and matrix systems, words you do not understand but they make the product sound legit right?. To top it off, you can “re-invest” your interest, back in to compound and earn even more money WOW THIS SOUNDS TO GOOD TO BE TRUE!!!.. That’s because it is you idiot….. there is not a single financial product or investment in the world that can guarantee a return of 1% interest compounded every day. Now you might be thinking, “What’s wrong with 1% a day, my mate doubled his money on Safemoon in a week” I’m sure your mates diamond hands are working out great for him right now, but let me show you a few examples of compounding interest and you tell me if you think these claims are reasonable.

If you started with $299 and compounded 1% per day for 180 days you would end up with roughly $1,792. it sounds reasonable really, it is not a huge number so it’s easy to believe. But what about if you continued to do this for a whole year? It all the sudden skyrockets to $11,297. Ok still not that out of the ordinary right?

Well, what about if instead of starting with $299 we go start $10,000, because this is such an amazing opportunity and the random lady from another country who sent you the referral link (we will get to this in a minute) seemed like a highly successful and genuine person. With a $10,000 seed, compounding 1% a day for one whole year, you will end up with $377,834. Chur boiiiiiiiiii, now we are talking, wow that’s incredible for only 1 year of savvy investing.

Wait….what about if we did it for 2 years? Well, you would be sitting on about $14.3 million dollars…. (Starting to feel like an idiot yet?) Clearly you have stumbled across the single best investment opportunity of the millennium, now let’s say you do this for 5 years. Well you will end up with paper balance of roughly 770 BILLION DOLLARS!. Congratulations, in just 5 years you are over 2 times wealthier than Jeff Bezos and are now the Richest person on earth, and to think it all started with a random DM and a $10,000 investment, lucky you.

If you haven’t yet realised, these sorts of returns are not only un-sustainable but they are completely unrealistic and you are being naïve. What you are actually putting your money in, is a run of the mill Ponzi Scheme with some technical buzz words attached to confuse you. You will find it hard to research the company you’re being pitched as they will most likely be registered in some random island with no government regulations or company history, and in most cases the founders or directors are anonymous or fake.

There will often be a referral system attached where you will get bonus interest, bonus packages or some form of commission for getting new people involved, and this is how they keep the scam running as long as they can. They will make the compounding offer so god damn good that it would be mental to cash out early, so you don’t. You see human behavior can be quite predictable, and the type of people that get involved with these get rich quick Schemes are the same type of people that suffer from greed and they won’t be able to help themselves. As long as new money is coming in and everyone‘s just rolling there interest back in to compound, then no one’s withdrawing their money. The scam keeps running and everyone thinks its all-golden with their paper profits. If you’re not sure what paper profits are > you may see a whole heap of $$$$$ on your dashboard but until you actually cash that money into your bank account, you haven’t made a single cent and its more or less pretend money.

Now some people will cash out and take their profits instead of rolling it back in, that’s what makes everyone think “This one’s legit” because people are actually making money. But it’s a tricky balance of money going out and money coming in that is the real job of the master mind behind the Scam. If more people want to cash out than there is new money coming in well, you got yourself an problem.

“Important announcement, due to some technical issues, we have limited withdrawals to $200 per day”

This is the first warning sign of the collapse of the house of cards. Why on earth do you need to limit withdrawals on a trillion-dollar dream investment machine that literally prints money faster than the fed?

I will tell you why, it’s because the scales are finally tipping, everyone’s running out of new people to pull into the “elaborate” scheme, so they have to limit the amount of money going out to let the money coming in to catch up. Sometimes they will follow this up with a new product or a relaunch to get everyone excited and to stop withdrawing their funds. Maybe a new marketing plan to give it another boost to drive in new money, but they will always fail eventually. “Important announcements, due to further technical issues withdrawals have seized until further notice” Oh owwww spaghettos, now there is panic in the streets, the articles are popping up left right and center, you have this feeling in your stomach that you may have got yourself into a spot of trouble. You ignore all the “FUD” and reassure yourself that you have faith and they are all just haters…yeah that’s right, bunch of dummies are just jealous they missed out on all them gains.

“404 error!! …. page not found”

oopps…website is gone, congratulations not only did you lose all your money, but every other poor bugger you convinced this was a good idea, also lost their money. “Oh its ok, I cashed out early” No its not ok you piece of shit, anyone who participates in a known scam is as responsible as the crooks who started it in the first place. Here is a short list of some of the known crypto “trading” ponzi schemes off the top of my head, USI tech, Bitconnect, Forsage, Onecoin, Lionshare, Hyperfund, Beurax but there are literally hundreds of them and new ones popping up every day. Now dont get confused here, there are plenty of very legitimate and successful companies that use a network marketing business model to help scale there company. The major difference being that a legitimate company actually has a product thats being sold or used, a scam simply relies on tricking everyone and balancing the money coming in and out until the gig is up.

The next time someone jumps into your inbox with a pitch for some passive investment opportunity, politely decline or do what I do. Educate them on what they are involved in, and tell them to have a good look at them selves and hopefully re-evaluate there decisions. If not they can take a walk in traffic or give the new covid vaccine a shot since they like to gamble. I’m sorry to be the barer or bad news, but there is no such thing as a free lunch, or an investment opportunity of a lifetime that involves some form of compound investing lock up period, and if something sounds to good to be true, it most likely is. If you want to make money from financial markets, you got to put in the hard work, do the research on your investments and be patient or learn how to trade. But you should NEVER…..EVER hand your hard earned over to someone else to trade for you.

Peace