Why do multi-level marketing and virtual currencies with 300% profit still have a place to survive?

Financial expert Lam Minh Chanh, Founder of BizUni Business School, surrounded by multi-level capital mobilization models, promising "huge" profits and many investors fell into the trap. Most recently, Sky Mining mobilized players to contribute capital to invest in virtual currency mining machines, paid huge interest of 300%, then the company owner "disappeared" with the reason of not being able to bear the long-term losses.

From the case of Sky Mining company mobilizing players to invest in virtual currency mining machines, paying interest up to 300%, before that was the collapse of the 15,000 billion VND virtual currency multi-level network of the ifan project... According to you, is the nature of these cases mobilizing multi-level capital, taking money from later people to pay earlier people? What is the clearest sign to recognize these fraudulent models?

Financial expert Lam Minh Chanh.

Sky Mining is exactly a project to raise capital in the form of multi-level marketing. In addition to the interest rates committed to all investors according to different investment packages, they also use a financial multi-level marketing trick (Ponzi model). Sky Mining pays additional money to attract investors.

Level X investors attract and recruit friends and acquaintances to become level X+1 investors… And Sky Mining also pays very high commissions for recruitment fees, so investors eagerly seek out friends and relatives. This project may have attracted thousands of billions of VND.

The most obvious sign of a scam model is the commitment of high profit rates. A project that commits to a profit rate 3-5 times higher than the bank interest rate is very risky. A project that commits to a profit rate 10 times, 20 times, 50 times higher than the bank interest rate is definitely a scam.

Why do many investors know but still fall into the trap? Is there any investment channel or investment model with a profit of up to hundreds of%, even 300% like Sky Mining?

Such investment scams always attract greedy but ignorant people. I often joke with my friends "they are investors who are greedy beyond their understanding".

The above companies prey on investors’ greed by promising sky-high interest rates. Along with that are new, trendy investment products and stories of successful, life-changing investments; rich, glamorous lives… They also use financial multi-level marketing tricks, paying more to attract investors. Investors attract and recruit friends and acquaintances to become their subordinate investors and receive commissions on the sales of the investors they attract.

In fact, there are still many similar models like ifan and Sky Mining operating, raising capital from investors... And is there a risk that more investors will "fall into the trap" at any time?

Over the past few years, I have listed quite a few scam investment projects on my Facebook page: Insider 21, OneCoin, Forex crowdfunding projects, and Sky Mining… And there are still many other scam projects. The main reason is the greed of investors. They are greedy beyond their understanding.

It must also be said that there are some "sly" investors. They know the project is a scam but still follow it. They get in early and get out early. The majority of investors who come later will fall into the trap and lose money...

Attractive returns, up to 300% are promised to investors from Sky Mining.

Why are these types of scams often labeled as investment models related to virtual currency?

Not only cryptocurrencies, new investment tools are often exploited to scam people who lack information and knowledge. In the early days of the stock market boom, many companies were hastily set up to sell shares because at that time, shares of companies rumored to be about to go public were very attractive to investors. Just buy at 2 dots (VND 20,000 - PV), 3 dots and you can immediately resell them at 5 dots, 7 dots. When people understand the basic principle: the stock price must reflect the value of the business, fake companies will sooner or later be exposed for what they are, along with the trick of setting up companies to sell shares.

The same goes for cryptocurrency. It is a new investment tool and the story of Bitcoin's skyrocketing price, creating many millionaires... is very attractive to investors. However, very few people really understand what cryptocurrency is. That's why scammers create projects around cryptocurrency. For example, OneCoin - a fake cryptocurrency. But the OneCoin businessmen tell a very attractive story about this currency, making the listener think that this is a genuine cryptocurrency, valuable and will increase in value more than Bitcoin in the future.

Sky Mining is built on cryptocurrency mining machines. While real cryptocurrency mining machines can give a profit rate of 30%, 50% or even higher, depending on the development of cryptocurrency prices, Sky Mining, with its fraudulent nature, promises investors that they can make a profit of 300% in a short time.

One of the reasons why these models are still able to attract and invite players, even organize a series of large-scale events and seminars in all provinces and cities but are not "touched" by management agencies is because of the lack of a legal management framework?

The biggest thing the government needs to do is to educate and inform people about investment and investment risks. Any project that promises high interest rates and no risk is definitely "problematic".

Before investing, we need to answer the following questions: Is the project legal? If there is a fraud or dispute, can the contract protect us? Is the company reputable? Who keeps the investors' money? How is the money secured? Many companies advertise themselves very aggressively but in reality they are powerless, have no reputation, and are not under the management of the State...

In the case of Sky Mining, all the money is given to them in exchange for reports on the mining machines. What guarantees are there that all the money has been used to buy the mining machines and then given back to Sky Mining to keep? So when an incident occurs, what do we have left to get back?

With such high interest rates, why don't they borrow money to invest? Why don't investment organizations and banks pour money into investment instead of "kindly" inviting us to benefit?