Many investments come with a lot of risks. The risk of investment increases if an investor is involved in a Ponzi or Pyramid scheme. Since they are illegal, they need to identify these schemes cannot be stressed. That said, we will explain what these schemes are so that you know how to avoid them.
The term "Ponzi Scheme" is coined from the name of an Italian criminal named Charles Ponzi. He became famous for his fraudulent money-making system after moving to North America to demonstrate his illegal activities. He was able to defraud hundreds of investors through his scheme in the early 1920s. What more, the scheme took place for more than a year. Generally, a Ponzi scheme involves collecting money from newly deceived investors and paying to older investors. While this might make a lot of sense, there is a considerable problem — investors on the backend will not receive any payment. Therefore, the fraudster could leave anytime.
The most famous Ponzi scheme happened more than a decade ago in the United States. It was organized by Bernard Madoff, who deceived investors in Bernard L. Madoff Investment Securities LLC. He was able to build an extensive network of investors, extorting cash from them in the process. Madoff defrauded almost 5000 investors. However, he didn't invest the money in his scheme, and the fraud collapsed after a financial crisis was experienced in 2018. According to the SEC (Securities and Exchange Commission), the total amount Madoff defrauded from investors was approximately $65 billion. This dubious activity sparked an urgency for regulators and investment professionals to hunt for Ponzi schemes.
This works in the business sector. Here, the business promises payments or rewards for new members and those who invite other members. For instance, an impostor offers John and Joan a chance to purchase the distributorship rights at $500 each in a company. When purchased, they will both have the right to sell distributorships themselves earn their share for every new member recruited. However, the $500 obtained from their sales is shared with the impostor in a 50/50 agreement.
For John and Joan to recover their initial investment, they sell two distributorships to two new people. Then this burden of recovering the initial investment is passed to recruits. However, the scheme will eventually break down because of the number of new members that get enrolled. This is what makes the Pyramid scheme an illegal practice. Presently, the majority of Pyramid schemes do not offer products or services. They are sustained by the money gotten from new membership recruitments. Still, some Pyramid schemes may present themselves as a legal multi-level marketing (MLM) company that offers products or services. This is done to hide their fraudulent practices.
That said, most MLM companies are pyramid schemes, but not all MLM companies are illegal.
We now understand that both Pyramid and Ponzi schemes are forms of financial fraud. However, a Pyramid scheme is different from a multi-level marketing campaign.
They can be hugely devastating for any guilty party, and it is essential to take the necessary steps in order to avoid these schemes. There is no assurance that there will be an end to these practices, but we can apply caution to reduce casualties.
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The first exploit covered by Rekt News, done in November 2020, was a flash loan that resulted in a $7 million loss. On May 5th, a new exploit occurred on the vBWAP/BUSD LP due to losing a line of code caused by “human error.” It didn't stop there, on May 7th vSwap contract was exploited draining 11M from its pools. In total these hacks resulted in over 20,000,000 of lost funds due to smart contract risks.
The ensuing investigation details are taken from the RektNews analysis of what went down with the code exploit:
During the setup of the profit-sharing vStake pool, the code was not written from scratch but migrated from the old implementation of the Value DeFi Reserve Fund. The original implementation had the correct setting, but when merging the code, the line was not included.
The latest hack on May 7th at 07:41:39 PM +UTC has drained 11M USD from the vSwap contract liquidity pools. Another blockchain-based security organization also released a medium post detailing what may have transpired with the code— an incorrectly weighted constant product invariant calculation.
From the technical analysis of what may have transpired with the code according to Peckshield;
“The root cause behind this attack, the vulnerability stems from the improper use of a complex exponentiation power() function, which unfortunately lies in the critical path for invariant calculation and enforcement. Confirming Rekt News “Human Error” identification of the problem. Peckshield also suggest to make the assumption explicit in the power() function by adding the following requirement: require(baseN >= baseD)!”
ValueDefi released this Tweet an hour ago, indicating that they are working with PeckShield Inc and Certik to analyze the root cause of the exploit.
Once again, the Binance Smart Chain (BSC) community has been reminded of the vulnerability of smart contract codes. A new day seems to come with a new code exploit, a pool draining, or a rugpull event done. The ecosystem is threatened with this type of event becoming rampant in recent times.
Does it show us weak contract codes, lazy teams, or better ways to strengthen the blockchain security systems further? Whatever the right answers may be, it shouldn’t come with repeated loss of funds for DeFi users.
Join the rest of the community to keep an eye on funds movement in the wallet.
SafeStar is a frictionless yield and liquidity generating protocol that works by applying 10% fees for each transaction. These transactions are subsequently split into two, 5% to locked liquidity, the remaining 5% distributed among holders.
This creates a system where token holders get rewarded without doing anything. Users must simply hold SafeStar tokens in a compatible wallet and they can watch their balance grow automatically, in a frictionless manner. The platform also incorporates a lottery system where users can catch fun for reward.
SafeStar token is integrated with a burn mechanism that tax 10% of the total amount per transaction, of which 5% goes to a locked pool and the remaining 5% split to stakeholder. This will help to reduce the total number of tokens in circulation over time. According to the statistics obtained from the website, a total number of 443,819,739,166,317 SafeStar tokens have been burned to date.
Earn passive income by the embedded RFI mechanics in the token. The RFI mechanics are responsible for the auto reward system that increases your balance. Whenever a transaction is done, whether a transfer between wallets, or a trade, SAFESTAR is split into two, where it is auto-locked and auto rewarded to holders.
Unlike most RFI based and deflationary platform without a working product, SafeStar has a native active lottery system with a weekly raffle draw held every week.
An active game is currently live and will end in 48hrs. A total of 500 million $SAFESTAR is required for entry and 150 billion $SAFESTAR token up for winning participants.
Fees generated from the lottery system are split into two; one part goes to the charity, which is currently around 0.9689 BNB, approximately $604 in today’s rate, and the constant burn of the tokens 51 billion $SAFESTAR.
Taking an assumption that the ticket price is 100 $SAFESTAR
The lottery system will add to the auto passive income generating medium of SafeStar for holders who have a high-risk appetite and wants to add up to their holding.
As part of the token growth and the SafeStar project expansion, the token has been listed on P2PB2B, one of the top crypto exchanges. This exchange offers that boast more than $600 million in daily trading volume. $SAFESTAR is also active on PancakeSwap and Bitmart.
The platform reached a new milestone; more than 44% of the Total Supply has been burned forever, a whopping $18,40,311. More burns are expected as the number of holders reaches a new level—a strategy to continue reducing the total supply of the tokens.
The platform features both deflationary and RFI mechanics. Each transaction is taxed with 10%, 5% goes to the PancakeSwap locked LP pool, and the other 5% is split with holders.
The deflationary tokens can earn you up to 80% in the Annual Percentage Yield (APY), higher than any traditional system.
An extensive number of the Q2 roadmap has been achieved;
What’s left of Q2 will be the R&D of various dApps, including Non-Fungible Token and other decentralized instruments.
As you can observe, marketing has been activated to promote the platform, YouTube influencers, and various marketing campaigns. Incorporating Non-Fungible Token (NFT) technology(marketplace) will bring it up to speed with other DeFi protocols that have implemented certain forms of NFTs in their systems.
Governance voting will be the next phase of development for the platform. The major decisions for the protocol will be placed in the hands of the community. Other beneficial features will be decided by the community when this goes live.
Passive generating income by doing nothing else than holding in your wallet is the safest type of DeFi stake we can find around.
SafeStar Lottery System sets it apart from other deflationary and RFI-based systems without a use case. Full-scale marketing has started for the project, and it is gradually becoming a phenomenon with the corporation of influencers from Twitter and Youtube. Holders should expect to see bigger moves from the team in the future.
Overall it is vital to proceed with caution when purchasing tokens that have just been listed. For those who have not already read our articles on safety in the BSC, it is crucial to reference the following items, HERE and HERE.
This is a paid press release, BSC.News does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their own research before taking any actions related to the company. BSC.News is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned in the press release.
Users who wish to learn more about SafeStar should check out the following resources and media pages:
Pyramid and Ponzi schemes are very similar because they are based on the same concept. Many people get fooled by impersonating investors who guarantee massive profits in exchange for their funds. Otherwise called a money-doubling scheme, a Ponzi or a Pyramid scheme can be hugely devastating to any casualty.
Many investments come with a lot of risks. The risk of investment increases if an investor is involved in a Ponzi or Pyramid scheme. Since they are illegal, they need to identify these schemes cannot be stressed. That said, we will explain what these schemes are so that you know how to avoid them.
The term "Ponzi Scheme" is coined from the name of an Italian criminal named Charles Ponzi. He became famous for his fraudulent money-making system after moving to North America to demonstrate his illegal activities. He was able to defraud hundreds of investors through his scheme in the early 1920s. What more, the scheme took place for more than a year. Generally, a Ponzi scheme involves collecting money from newly deceived investors and paying to older investors. While this might make a lot of sense, there is a considerable problem — investors on the backend will not receive any payment. Therefore, the fraudster could leave anytime.
The most famous Ponzi scheme happened more than a decade ago in the United States. It was organized by Bernard Madoff, who deceived investors in Bernard L. Madoff Investment Securities LLC. He was able to build an extensive network of investors, extorting cash from them in the process. Madoff defrauded almost 5000 investors. However, he didn't invest the money in his scheme, and the fraud collapsed after a financial crisis was experienced in 2018. According to the SEC (Securities and Exchange Commission), the total amount Madoff defrauded from investors was approximately $65 billion. This dubious activity sparked an urgency for regulators and investment professionals to hunt for Ponzi schemes.
This works in the business sector. Here, the business promises payments or rewards for new members and those who invite other members. For instance, an impostor offers John and Joan a chance to purchase the distributorship rights at $500 each in a company. When purchased, they will both have the right to sell distributorships themselves earn their share for every new member recruited. However, the $500 obtained from their sales is shared with the impostor in a 50/50 agreement.
For John and Joan to recover their initial investment, they sell two distributorships to two new people. Then this burden of recovering the initial investment is passed to recruits. However, the scheme will eventually break down because of the number of new members that get enrolled. This is what makes the Pyramid scheme an illegal practice. Presently, the majority of Pyramid schemes do not offer products or services. They are sustained by the money gotten from new membership recruitments. Still, some Pyramid schemes may present themselves as a legal multi-level marketing (MLM) company that offers products or services. This is done to hide their fraudulent practices.
That said, most MLM companies are pyramid schemes, but not all MLM companies are illegal.
We now understand that both Pyramid and Ponzi schemes are forms of financial fraud. However, a Pyramid scheme is different from a multi-level marketing campaign.
They can be hugely devastating for any guilty party, and it is essential to take the necessary steps in order to avoid these schemes. There is no assurance that there will be an end to these practices, but we can apply caution to reduce casualties.
