Most of us have probably heard of Ponzi schemes or pyramid schemes. If you are familiar with these terms, you are likely thinking, like most people, that they would be easy to spot, thanks to the common mindset of “if it sounds too good to be true, it probably is”.

Yet that is not always the case. Some schemes are so sophisticated that even highly diligent people fall victim. On the other side of the coin, other schemes are not overly sophisticated but instead prey on the vulnerable.

With that said, before diving deeper into this article, here is a breakdown of the key differences between pyramid schemes and Ponzi schemes for those who are not entirely sure of the differences:

The purpose of this article is to raise awareness, particularly during times of market uncertainty when investments fluctuate. This is precisely when Ponzi fraudsters target victims: nervous investors seek steady returns outside the norm, allowing schemers to set up and launch their fraud. Pyramid scammers also exploit this uncertainty, promising substantial payouts for recruiting members into their “programmes”.

Let’s look at Ponzi schemes first.

While researching this article, I noted a very recent Ponzi scheme that was identified: Goliath Ventures, a Florida-based cryptocurrency firm. Operating from January 2023 through early 2026, it allegedly defrauded more than 2,000 investors of $328 million.

CEO Christopher Delgado was arrested in February 2026 and faces up to 30 years in prison on wire fraud and money laundering charges. Prosecutors say he used new investor funds to pay earlier investors while spending millions on luxury cars and real estate.

Furthermore, as of March 2026, JPMorgan Chase faces a lawsuit from investors who claim the bank overlooked red flags and facilitated the fraud through its banking services (Revell, 2026).

The reality is, Ponzi schemes often cultivate an aura of exclusivity, urging immediate participation before a supposed opportunity closes. Early investors, often unwitting accomplices, receive timely payouts and become enthusiastic promoters, recruiting friends and family. This word-of-mouth growth within tight-knit communities creates a false sense of trust.

Identifying a Ponzi scheme before it collapses requires vigilance against promises that defy economic logic. The most glaring red flag is the guarantee of consistently high returns with little to no risk, a combination that legitimate investments simply cannot offer.

In a healthy market, returns fluctuate with underlying performance, but Ponzi operators fabricate steady, positive results regardless of broader economic conditions. This illusion of stability is maintained not through legitimate revenue generation, but by using new investors’ money to pay earlier participants, creating a fragile house of cards that inevitably crumbles when inflows slow or withdrawals surge.

Another critical warning sign is complexity paired with secrecy. Ponzi operators often cloak their ventures in convoluted jargon; most recently terms used were, crypto arbitrage, proprietary trading algorithms, or exclusive mirrored investment platforms.

Such jargon makes it nearly impossible for investors to understand how money is actually being made. When Ponzi operators are pressed for details, they deflect with claims of proprietary secrets or insist that the strategy is too sophisticated for the norm to grasp.

Legitimate investment managers, by contrast, provide transparent documentation, audited financial statements, and clear explanations of their methodologies.

Ultimately, if an investment sounds too good to be true, offering exceptional returns without corresponding risk, walking away is the only prudent course, as the scheme’s mathematical impossibility ensures eventual collapse.

On the other hand, pyramid schemes are centred on recruitment, commissions, and payout sequences.

The most recent notable example is the collapse of Blessings in No Time (BINT), operated by LaShonda and Marlon Moore from 2020 to 2021, which defrauded over 10,000 victims of more than $25 million.

The BINT scheme operated as a financial gifting circle, whereby participants were required to pay an entry fee of $1,400, which promised them an eventual payout of over $11,000, an 800 per cent return, once they advanced through the four-tier hierarchy. The $1,400 entry fee was directly correlated to the pandemic stimulus cheques paid out in the US.

The structure was organised into levels named Fire, Wind, Earth, and Water. New participants entered at the bottom as Fire and were instructed to recruit additional members.

As new recruits joined and paid their fees, existing participants moved upward through the levels. Once a participant reached the top Water position, they would receive a payout of approximately $11,200, after which the cycle would theoretically reset (US Attorney's Office, 2023).

Once the US government ended the stimulus cheques, the scheme collapsed when recruitment could no longer sustain the payouts promised.

It is important to remember the draw of the pyramid scheme preys on the promise of easy money, but its structure reveals the fraud. Unlike legitimate multilevel marketing companies that prioritise product sales, a pyramid scheme collapses under its own mathematics.

The primary red flag is an emphasis on recruitment over any genuine product or service. If the primary way to earn money is by bringing in new participants rather than selling to outside customers, the model is simply unsustainable.

Furthermore another warning sign is the requirement of a significant upfront payment to join, often framed as a “starter kit” or “entry fee”. Schemes frequently disguise themselves within communities using specific language, such as the promise of financial freedom or claims of wealth redistribution. Participants are pressured to recruit friends and family, with complex payout structures that disproportionately reward those at the very top.

Ask yourself: if the only way to make money is through new recruits entering the system, walk away. The collapse is inevitable and will leave everyone except the scammers with substantial losses.

At the end of the day, these fraudsters are smart enough to know the ideal time to strike and the type of victim they are looking for.

More often than not, it is during times of economic uncertainty that these schemes begin their search for victims. Therefore, being extra diligent and keeping an eye on the vulnerable is essential.

References

Revell, E. (2026) Florida man arrested over alleged $328m crypto Ponzi scheme. Fox Business. Available from: https://www.foxbusiness.com/lifestyle/florida-man-arrested-over-alleged-328m-crypto-ponzi-scheme [Accessed 22 March 2026].

US Attorney's Office (2023) Couple Charged for Operating Multimillion-Dollar Pyramid Scheme. United States Secret Service. Available from: https://www.secretservice.gov/newsroom/releases/2023/11/couple-charged-operating-multimillion-dollar-pyramid-scheme [Accessed 22 March 2026].

• Carla Seely is the chief operating officer at Freisenbruch Insurance Services Limited and has 26 years of experience in the international financial services, wealth management, and insurance industries. During her career, she has obtained several investment licences through the Canadian Securities Institute. She holds the ACSI qualification through the Chartered Institute for Securities and Investments (UK), the qualified associate financial planner (QAFP) designation through FP Canada, and the associate in insurance (AINS) designation through The Institutes. She also completed a Master’s Degree in Business and Management through University of Essex

• For further inquiries or suggested topics, e-mail justaskcarla@outlook.com