Ponzi Scheme
A fraud paying old investors with new investors' money — a structure many high-yield crypto 'projects' quietly replicate.
A Ponzi scheme pays returns to earlier investors using capital from newer ones, rather than from any real profit-generating activity. It survives only while new money inflows exceed withdrawals, and collapses when they don’t — mathematically guaranteed to fail, leaving late entrants with the losses.
Crypto’s high-yield culture makes Ponzis common, sometimes dressed as “staking” platforms, “arbitrage bots,” or DeFi protocols whose yield is really just new deposits. The diagnostic question is always the same: where does the return actually come from? If the answer is vague, circular, or “the platform’s secret strategy,” the yield is other victims’ money. Guaranteed high returns plus opacity is the signature. See our scam red-flags guide.