<
https://www.bloomberg.com/opinion/articles/2023-01-05/coindeal-s-bentleys-weren-t-real>
"The simplest form of investment scam is that you promise people some
attractive return on their investment, they like the promised return and give
you their money, and you steal it. In this scam, what sort of return should you
offer your marks in order to maximize your take? There are two basic
approaches, which are:
1. A reasonable return, or
2. An insane return.
The first approach was made famous by Bernie Madoff, who ran a gigantic Ponzi
scheme that offered relatively modest, stable, boring returns. The advantage of
this approach is that it can attract sophisticated investors: Madoff was able
to raise money from rich people and funds-of-funds because, in their obviously
flawed due diligence, they concluded that the returns he promised were
plausible. Rich people and funds-of-funds have lots of money, so Madoff was
able to raise lots of money and keep the scheme going for a long time.
The second approach has some advantages too. For one thing, people want high
returns, so I guess the higher the return you promise the more people will want
it and the more money they’ll give you. Also, though, you are running a scam,
so you mostly don’t want sophisticated investors. It is plausibly harder to
trick sophisticated investors than it is to trick unsophisticated ones. This is
like why advance-fee scam emails have lots of typos: “By sending an initial
email that's obvious in its shortcomings, the scammers are isolating the most
gullible targets.” Promising a 1,000,000% return ensures that you never end up
talking to anyone but the most gullible possible marks.
Also promising a 1,000,000% return is just very funny?"
Via Molly White’s newsletter Issue 16 – Bahamian brouhaha:
https://newsletter.mollywhite.net/p/issue-16-bahamian-brouhaha
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
