Common Scam Schemes — How the Money Actually Moves
Six recurring schemes (Ponzi · mentor fraud · signal inflation · PAMM pyramid · pump-and-dump · recovery scam) — with real cases from CFTC / SEC / FBI files and the one test that catches each one.
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6 schemes · 60-sec test for each
- Ponzi/HYIP — "fixed % per day/week" → walk away.
- Mentor fraud — no read-only Myfxbook? Selling courses, not trading.
- Signal inflation — VIP channel + no third-party tracker = cherry-picked.
- PAMM pyramid — returns from referrals, not the master's PnL.
- Pump-and-dump — top-10 wallets hold > 50 %? Hype is the exit.
- Recovery scam — "we'll get your money back, pay now" → never.
The 6 scheme families, with real cases
Every scheme below has been prosecuted at least once by a Tier-1 regulator (CFTC, SEC, FCA, BaFin, FBI). The pattern recurs because it works on the same psychological loop: visible early winners → social proof → new deposits → fake balance → eventual collapse.
A 'high-yield investment program' that promises fixed daily/weekly returns and pays early users from later users' deposits — there is no underlying trading.
MTI claimed an AI bot generated 10 %+ monthly returns on Bitcoin futures. CFTC investigation found no real trading; the operator (Cornelius Steynberg) used new deposits to pay earlier 'returns' until inflows dried up. Steynberg later convicted on $1.7 B fraud.
SourceOperator advertises a fixed return, takes deposits, posts fake 'profits' in a dashboard. As long as new deposits exceed withdrawals, the dashboard balances. When inflow stops, the scheme collapses overnight.
Test: ask for an independently audited proof of the underlying trading (broker statements, third-party tracker). Real strategies have variable returns. A flat % is the diagnostic.
An influencer flexes a luxury lifestyle, claims a six- or seven-figure year, and sells a course/community that teaches almost nothing actionable.
Built on TikTok/YouTube reels of cars and watches with no verifiable broker statements. The 'university' is a Discord-style affiliate program: students earn commission for recruiting more students. Multiple regulators (FCA UK 2022, Romania investigation) issued warnings.
Revenue ≠ trading; revenue = course subscriptions + recruitment commissions. The 'mentor' rarely shows a verified live track. Lifestyle imagery is rented or borrowed.
Test: demand a verified, real-money, multi-year track record (Myfxbook / FX Blue with read-only API access, NOT a screenshot). If they refuse, they are selling courses, not trading.
A 'VIP signals' Telegram channel posts +X pips screenshots, hides losses, deletes bad calls, and sells a monthly subscription on the survival-bias picture.
ESMA and FCA repeatedly warn that signal services advertising fixed win rates (>80 %) and high pip totals are mostly cherry-picked. The decisive marker: refusal to publish trades to an independent tracker with read-only API access.
Channel posts setups in real time. Wins are screenshotted, posted again, and pinned. Losses get deleted or quietly closed; messages are edited or removed. Subscriber sees a survival-bias feed.
Test: require a public, read-only third-party PnL feed (Myfxbook, FX Blue, our own AI Signals public API). No tracker = no proof.
A 'managed account' service that lets you join a 'master trader' — but the structure is recruitment-driven, not trading-driven.
Forsage marketed itself as a decentralised investment platform; the SEC found it was a Ponzi/pyramid where 'returns' were just new participants' deposits routed through smart contracts. ~$300 M lost.
SourceReturns to existing 'investors' depend on recruiting new participants below them. The trading layer is either nonexistent or trivial; the real cash flow is the affiliate tree.
Test: separate the trading economics from the affiliate economics. If your expected return depends on referrals (not on the trader's PnL), it is a pyramid.
Coordinated buying of a low-liquidity altcoin to spike the price, then dumping onto retail buyers who saw the move on social media.
SafeMoon's founders and developers were charged with defrauding investors of $200 M through a classic pump-and-dump. They unlocked liquidity pools (which they had promised would stay locked) and cashed out.
SourceInsiders accumulate cheaply, orchestrate hype (paid influencer posts, Discord 'signals'), trigger FOMO buying, then sell into the spike. Retail buyers hold the bag as the price collapses.
Test: any 'guaranteed' or 'time-sensitive' move on a low-cap token is a scheme. Check token-holder distribution (Etherscan, BscScan) — if top-10 wallets hold > 50 %, walk away.
After you lose money to one of the above, a 'recovery agent' DMs you offering to claw it back — for an up-front fee.
FBI repeatedly flags 'asset recovery' fraudsters who target victims of prior scams. They claim insider law-enforcement contacts, demand a retainer or 'court fee', and disappear. Victims are scammed twice.
SourceScammer buys leaked victim lists (from the original scam's leaked DB) and pitches them with personalised hooks. The retainer is the entire revenue — no recovery is ever attempted.
Test: NO legitimate lawyer, regulator, or law-enforcement contact demands an up-front recovery fee. File complaints through official channels (IC3 in US, Action Fraud in UK, Europol EC3 in EU) — they do not cold-call you.
Key terms
Worked example — "Daily 2 % AI Bot"
"Our proprietary AI bot trades BTC futures and produces a steady 2 % daily return. Audited. Withdrawals in 24 h. $250 minimum, $50 k maximum per account."
- Fixed daily % → cannot be real trading. BTC has 70-80 % annualised volatility; a 2 % daily return implies + 30,000 % annual, which would dominate the entire BTC futures market in weeks.
- "Audited" with no auditor named or report linked → empty signal.
- Caps both ways ($250 / $50 k) → maximises affiliate-style spread, minimises any single regulator's scrutiny threshold.
Diagnostic test: ask for the trading account's read-only broker statement covering 90 days. If they refuse / stall / produce only a dashboard screenshot — confirmed Ponzi.
Guided practice — the 6-question decision tree
Run this on any offer you encounter. Each step takes ~5 seconds; the whole tree fits in under a minute.
- 1Does the offer promise a fixed % return?
If yes → Ponzi / HYIP. Walk away.
- 2Does revenue depend on recruiting referrals?
If yes → pyramid (PAMM / DeFi / 'club' wrappers all count). Walk away.
- 3Does the 'mentor' refuse a read-only Myfxbook / live tracker link?
If yes → mentor scam. Their revenue is courses, not trading.
- 4Does the signal service ban third-party tracking?
If yes → signal inflation. You're seeing a cherry-picked survival-bias feed.
- 5Is the token low-cap with concentrated top-10 wallets and viral hype?
If yes → pump-and-dump setup. Check Etherscan / BscScan.
- 6Did someone DM you offering to recover prior losses for an up-front fee?
If yes → recovery scam. Pay nothing; file with IC3 / Action Fraud / Europol EC3.
Independent practice — match the pitch to the scheme
Four pitches. Identify the scheme, then expand the verdict to check yourself.
"Daily 1.5 % returns on a Bitcoin AI bot. Withdraw anytime. Audited."
Show scheme + reason
Test: ask for an independently audited proof of the underlying trading (broker statements, third-party tracker). Real strategies have variable returns. A flat % is the diagnostic.
"$497 mentorship — I made $1.2 M last year. DM me for the curriculum + Discord access + affiliate program (60 % commission)."
Show scheme + reason
Test: demand a verified, real-money, multi-year track record (Myfxbook / FX Blue with read-only API access, NOT a screenshot). If they refuse, they are selling courses, not trading.
"VIP Telegram signals · 92 % win rate · +3,400 pips this month · NO outside tracking allowed — internal proof only."
Show scheme + reason
Test: require a public, read-only third-party PnL feed (Myfxbook, FX Blue, our own AI Signals public API). No tracker = no proof.
"Join MasterFX PAMM. Returns come from the master trader AND from your downline — earn 10 % of each referral's profit, 5 % of their referral's, …"
Show scheme + reason
Test: separate the trading economics from the affiliate economics. If your expected return depends on referrals (not on the trader's PnL), it is a pyramid.
Apply — investigate one channel this week
Mastery check
Seven questions. Pass at 6 of 7 (≈ 80 %). Randomised — take it twice if you slip on a question.
Common Schemes Mastery Quiz
Test your understanding with 7 questions. Pass with 6/7 correct.
Reflect
Reflection
Type your honest answers — saved on this device only. Use them next week to spot patterns in your trading thinking.
Ponzi forensics — the inflow-outflow signature
You can usually distinguish a Ponzi from a real fund by looking at the relationship between deposit inflows and withdrawal outflows over time. Real funds have outflows uncorrelated with the daily inflow curve (clients withdraw on their own schedule). Ponzi funds force outflows to track inflows because there is no other revenue.
Mirror Trading International — leaked logs analysisPro
Post-collapse analysis of MTI's ledger (made public during the CFTC case) showed that 96 % of outgoing 'profit payments' in any given week fell within ± 5 % of that week's new deposits. A real bot's PnL would diverge from inflow because it would depend on market moves, not deposit volume.
Forsage smart-contract economicsPro
Forsage was on-chain, which made the pyramid mathematically explicit: each participant's expected return required N new joiners below them at each level. SEC analysts modelled the geometric series and showed that after 12 levels the required new participants exceeded the global internet population — a tell-tale unsustainable curve.
Edge cases
Real strategies that look Ponzi-ish at first glancePro
Some genuine fixed-income or insurance-linked strategies produce remarkably stable monthly returns over short windows (3-6 months). Distinguishing them: (a) real assets under management on an independent custodian, (b) audited NAV by a top-50 audit firm, (c) regulator filings (Form ADV in US, SUP 16 in EU). All three must hold — any one alone is forgeable.
Legitimate copy-trading vs PAMM pyramidPro
Legitimate copy-trading (e.g. Myfxbook AutoTrade, eToro CopyTrader on regulated brokers) lets you copy a master's trades through your own brokerage account — your funds stay with the broker, not the master. Pyramid-PAMM pools your funds under the master's control + adds affiliate compensation. The custody model is the diagnostic.
Bibliography
- CFTC — Mirror Trading International ($1.7 B)
- SEC — Forsage smart-contract MLM ($300 M)
- SEC — SafeMoon ($200 M pump-and-dump)
- FBI IC3 — recovery scam warnings (annual reports)
- FCA — UK investment fraud warning list
Show answer
Examples — Ponzi/HYIP: ask for independently audited broker statements. Mentor fraud: demand a multi-year read-only Myfxbook link. Signal inflation: refuse any service that bans third-party tracking. PAMM pyramid: check whether expected return depends on referrals or master's PnL. Pump-and-dump: check top-10 wallet concentration on the explorer. Recovery scam: never pay an up-front fee — file through IC3/Action Fraud/Europol.
Educational material only — not investment advice. Trading carries risk of capital loss. Always practice on demo and use a stop-loss. ← Back to Scam Check