A Ponzi scheme is an arrangement in which returns paid to existing participants come from the deposits of new participants rather than from any real economic activity. Because each round requires more incoming money than the last, collapse is arithmetically certain — only its timing is open.
The characteristic signs are consistently high returns that do not fluctuate with any market, commission for recruiting new participants, an unexplainable business model, and pressure to reinvest rather than withdraw.
Why it matters to you
Operating such a scheme is generally fraud under § 263 StGB, and where it was marketed with misleading documents to a larger group, capital investment fraud under § 264a StGB may also apply. Speed matters after a collapse, because the window for securing assets is short. See the guide to spotting Ponzi schemes and our investment fraud page.
Pig butchering
A scam combining weeks of trust-building with fake crypto investments. Definition, typical sequence and help for victims.
Recovery scam
A follow-up fraud in which supposed recovery services promise defrauded victims their money back against advance payment.
Unregulated broker
A provider without the licence required by § 32 KWG. Why the missing supervision is a clear warning sign.