Top 5 Reasons Why Ponzi Schemes Crash

The Rise & Fall Of Ponzi Schemes: Top 5 Reasons Why Ponzi Schemes Crash

Top 5 Reasons Why Ponzi Schemes CrashThe past few months have witnessed a sporadic rise and increase of Ponzi schemes. In Nigeria, the introduction of the Mavrodi Mondial Movement (MMM) and its subsequent one month break in December has led to an influx in other diverse schemes. Within few months, over hundreds of these Ponzi schemes have failed and closed shop. Lamentably, millions of Naira has been lost to many of these Ponzi schemes. It was even on record that a certain man committed suicide when he could not recover his wedding money invested in MMM. What are the top 5 reasons why Ponzi schemes crash?

In evaluating the top 5 reasons why Ponzi schemes crash, let us look at some of the Ponzi schemes that have crashed. The major crashed ponzi schemes include Ultimate Cycler, MMM United, MMM West Africa, MMM United, Icharity, Zarfund and NNN. Others include MMM-Cash, Pay Doublers, Crowd Rising, Givers Forum, Twinkas, Naracle, Clarittas, Mysurecash etc. So, what really are the top 5 reasons why Ponzi schemes crash. What could be the likely causes?

Charles Ponzi – Founder Of Ponzi Schemes

Top 5 Reasons Why Ponzi Schemes Crash

Let us deal justice to the top 5 reasons why ponzi schemes crash. They are not arranged in any particular order.

  • Unsustainable Return On Investment: The top reason why many Ponzi schemes crash is the issue of unsustainable Return On Investment (RoI). Most Ponzi schemes promise over 300% within few hours. And basically, they are unsustainable. Most are operating under the 1:4 ratio. At such, it becomes unsustainable and most of them do not last beyond a week and they fold up. To sustain this, you need a huge influx of new members daily. Once new investment seizes to come in, it folds up. A good example is Twinkas.
  • Admins/Supports Incompetence: The second of the top 5 reasons why Ponzi schemes crash is the issue of admin/support incompetence. A good Ponzi is as good as it’s administrative competence. Most Ponzis operate with 3-4 admins. And with a membership base of over 10,000, it becomes impossible to see how the support team can respond to all members complaints. When there are issues of fake pop, delayed in matching, failed transaction etc, members who write to support would stay over 2 months without being attended to. Once it happens like this, members become disgruntled and start discouraging prospective participants. Old members will cease to make payments and as such, crashing becomes inevitable. A typical example is Giversforum and Mysurecash. Most admins introduce negative policies that would frustrate the members. Eg, in Mysurecash, participants had to wake up at midnights to GH and the site won’t be accessible.

Also See: Processes And Requirement Of Becomig An MMM Guider

  • Greed By Founders And Members: Greed is actually a vice that destroys anything and anyone it catches up with. Most founders initiate Ponzi schemes just to dupe unsuspecting members. They start by merging members to pay them through crony accounts. Once they receive their own share, they run away and close up the sites. Eg is Pay Doublers. Related to this is greed by members. Most members open over 5 accounts with the aim of earning from all. When they are merged to pay, they will be unable to meet up. Many will upload Fake POP. Others will turn to what is called “Cyber Beggers”. They would beg you to approve them that they will pay you when they earn. All these lead to challenges affecting the system. Others, once they are paid will run away. Once they do not recycle, no one pays the new members.

Also See: MMM Nigeria Registration; How To Register And Participate In Giversforum; Make 50% In 28 Days With Mysurecash

  • Complaints: Once one or more of the above mentioned issues occur, members will resort to complain. They will go to whatsapp groups, Facebook pages, telegram groups and many other social media to vent their complains. Once this happens, old, new and prospective members will withdraw and refuse to make payment. This leads to gradual but automatic death of the Ponzi scheme.
  • External Forces (The Media and Govt): The reasons we listed above have all had to do with internal factors. External factors can also account for Ponzi crashing. Some of the forces include the government and the media. Most governments would engage on concerted publicity and campaign against Ponzi schemes. Particularly, the Nigerian Government led a serious campaign against MMM and other Ponzis. When MMM went on a one-month break, many persons took to the media to lament their disobedience to the governments warning. The social media also contributes in the campaign against Ponzi schemes. Most of the media houses went to great length in bring stories of failed Ponzi schemes from other countries of the world. All these contribute in discouraging new participants from joining the schemes and at such, leading to their demise.

    A TV Program Against Ponzi Schemes

This is all we have on the Top 5 Reasons Why Ponzi Schemes Crash. Surely, you would want to add to these reasons. We would be glad to hear from you. You can also share your experiences on Ponzi scheme with us.

Pin It on Pinterest

Share This