Ponzi schemes?

Several people have been in touch to ask about one of the variety of Foreign Exchange trading web sites that offer massive returns for your investment. One, called EurExTrade, offers quite remarkable returns. They claim that you can earn "Up to 2.9% Daily". If this was true, and you were lucky enough to get the suggested 2.9% return every day for a month, an initial "investment" of $1,000 would now be $2,358. Not bad. That's if you believe them. 90 days at this rate would get you over $13,000.

A year earning this level of return would give you $34 million.

Let's be more pessimistic. What if you only got 1% per day? You'd still get nearly $38,000 after a year.

Let's face a simple fact. If this was possible why wouldn't banks be doing it?

But then it gets worse. Another site, with an almost identical name, "Eurex-Trade" makes even more startling promises. We'll ignore their spelling problems.

Surely this bears all the signs of a scam? My hunch was some form of Ponzi scheme where early "investors" make some returns are made but only by using the money from later victims.

Now it seems like the BBC agrees with me!