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Exit scammers run off with $660M in ICO earnings

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Re: Exit scammers run off with $660M in ICO earnings

#151

Post by shkkmo »

alehul wrote: post #90
ashleyn wrote: post #60

Earlier quoted context omitted.

Willfully participating in a Ponzi scheme is a crime.

Rather than Ponzi scheme, I'd classify the investors as participating in a Pump & Dump. A Ponzi scheme is when it's an investment vehicle (i.e. hedge fund) that provides returns to older investors through capital acquired from newer investors. In this case, by contrast, it's overhyping (to the point of fraud) a publicly traded security in hopes of rallying some investors to buy in, which increases the price, further…

> A Ponzi scheme is when it's an investment vehicle (i.e. hedge fund) that provides returns to older investors through capital acquired from newer investors.

Isn't that exactly what they did?

From the Article:

> Pincoin was particularly unique in that it offered bonuses for bringing other people into the program, a tactic that might sound familiar. The scammers paid out in cash until January when they began sending iFan tokens.

Pump and Dumps make their money by selling the asset once it's price has been inflated. In this case, the money was made throughout the whole ICO by fraudulently selling a security.

Re: Exit scammers run off with $660M in ICO earnings

#152

Post by ll931110 »

Thriptic wrote: post #77
hmahncke wrote: post #36

Earlier quoted context omitted.

Actually, normal people do deserve protection from financial scams; and they don't deserve what they get just because they are not as sophisticated as a HN reader.

I don't think it takes a particularly high amount or sophistication to google "ico", see that most of them are scams, and stay away. People shouldn't invest in things they don't understand.

There are a lot of assumptions in this statement.

1. You assume those people are proficient in English.

2. You assume those people can operate a smartphone or a computer, let alone go search for news.

3. You assume they will immediately discard scammy stories as fake. True story: yesterday, a relative of mine sent me a story about keeping her Facebook's account free by sending a certain SMS to 10 other people in her contact book. It took me 5 minutes to explain to her this was obviously a scam, and yet she wasn't totally convinced, because by her words "a lot of her friends sent her the same SMS".

4. You assume people have financial knowledge about investment or basic understanding of risk and return. Remember, in Vietnam there's no concept of 401k or IRA, and most people never invest before.

5. You assume people have college degree. In fact, many victims didn't finish high school or even middle school. Despite all the news, a large population of Vietnam still lacks college education.

Re: Exit scammers run off with $660M in ICO earnings

#153

Post by proofofmoon »

loceng wrote: post #46
creeble wrote: post #12

Earlier quoted context omitted.

This is an interesting phenomenon in general.

I've heard lots of coverage and excitement for Bitcoin et al on the radio, TV, etc - however they oddly never mention or talk about the Pyramid-Ponzi scheme, they never have an 'expert' on to counter the hype. Obviously there are more people incentivized to talk positively about these incentivized crypto-assets (assuming they own crypto-assets structured as Pyramid-Ponzi schemes), so they learn and get good talking a…

If we define "pyramid-Ponzi scheme" is that the value goes up if more people talk about and buy it, then every asset is a pyramid-Ponzi scheme. Startup shares, lottery tickets, stocks, US dollars, oranges, everything.

It's not a very useful definition.

Re: Exit scammers run off with $660M in ICO earnings

#154

Post by pjc50 »

alasdair_ wrote: post #147
ashleyn wrote: post #21

Earlier quoted context omitted.

This is one thing most people don't understand. If someone is selling you a financial instrument with >6-7% annual returns, it's as ridiculous as someone selling you a time machine or the cure to death. The top 500 companies by market cap don't do much better than 6-7% annually on average.

>This is one thing most people don't understand. If someone is selling you a financial instrument with >6-7% annual returns, it's as ridiculous as someone selling you a time machine or the cure to death. A 2X leverage ETF would have double that rate of return, minus the overhead and interest on the leverage. Of course, it would also have double the losses in down years. With enough leverage, you can "easily" create a…

.. by increasing risk to the extent that you can lose more than you invested, yes. Leverage is quite dangerous for retail investors.

Re: Exit scammers run off with $660M in ICO earnings

#156

Post by alehul »

shkkmo wrote: post #151
alehul wrote: post #90

Earlier quoted context omitted.

Rather than Ponzi scheme, I'd classify the investors as participating in a Pump & Dump. A Ponzi scheme is when it's an investment vehicle (i.e. hedge fund) that provides returns to older investors through capital acquired from newer investors. In this case, by contrast, it's overhyping (to the point of fraud) a publicly traded security in hopes of rallying some investors to buy in, which increases the price, further…

> A Ponzi scheme is when it's an investment vehicle (i.e. hedge fund) that provides returns to older investors through capital acquired from newer investors. Isn't that exactly what they did? From the Article: > Pincoin was particularly unique in that it offered bonuses for bringing other people into the program, a tactic that might sound familiar. The scammers paid out in cash until January when they began sending i…

Offering bonuses for bringing other people into the program is a Pyramid Scheme tactic. Ponzi is specifically in cases where there's a portfolio manager or something controlling the entire operation and allocating returns to early investors through distributing the capital of the new investors.

Re: Exit scammers run off with $660M in ICO earnings

#157

Post by JumpCrisscross »

akvadrako wrote: post #129
JumpCrisscross wrote: post #109

Earlier quoted context omitted.

> 7% interest isn't absurd It does require asking intelligent questions. Like what has been the historic default rate amongst TWINO’s borrowers? Is the borrower quality for recent cohorts higher or lower than for earlier cohorts? How might one enforce their claims in a Latvian court? Cryptocurrency gamblers don’t do this. If you’re earning 7% in U.S. dollars or Euros and not reading and thoroughly understanding the p…

It's not a "past performance isn't indicative of future performance" scenario in any reasonable sense. The loans you buy are already sold and it's fixed rate. You are calling the risk of the whole company defaulting "performance" and that's what I disagree with. Their highest rated loans (11-13%) are guaranteed by them; that's quite explicit. The end-borrower default-rate is pretty low which is why they can do it.

> The loans you buy are already sold and it's fixed rate

Let's say you buy 100 $100 loans at 7%. You expect to earn back your $10,000 of principal plus $700 of interest. If 10% of your bonds default, you get back $9,000 of principal and $630 of interest. That's a 4% loss on principal.

TWINO advertises it will buy back defaulting loans at face value; if they pay out, you earn $10,700 irrespectively. (I'll ignore that their Terms of Use appear to explicitly refute this guarantee [1].)

But what if they don't pay? Do they have cash on hand to pay if 10% of loans issued through their platform default? What about 50%? (This happened in the financial crisis. People thought they had "no risk about performance" because someone guaranteed their bets.)

This is why understanding the background default rate, whether the credit quality of new borrowers is worse than old borrowers, and TWINO's cash position are important. If the whole company defaults and borrowers default enough, you will underperform (a) expectations, (b) a risk-free security like a U.S. Treasury and (c) even straight cash.

TL; DR TWINO is risky. Why do you think they're selling the loans to you, instead of banks or hedge funds or sophisticated investors?

> You are calling the risk of the whole company defaulting "performance" and that's what I disagree with

See the above. If the company defaults your guarantor vanishes. Now you're directly exposed to the credit of your borrowers. (You'll also have to enforce your claims under Latvian law. Be ready to find and pay a Latvian lawyer.)

[1] https://www.twino.eu/ws/public/user-agreement-stream?lang=en

Re: Exit scammers run off with $660M in ICO earnings

#158

Post by s73v3r_ »

aje403 wrote: post #139
spurcell93 wrote: post #128

Earlier quoted context omitted.

I presume this is sarcasm, and if so, jolly good, but if not, god save us all

I’m trying to figure out if either everyone is autistic on this site or if I’m horrible at sarcasm. It could equally be either

Poe's Law. There are legit coin "truthers" out there who would say that without a hint of irony.

Re: Exit scammers run off with $660M in ICO earnings

#159

Post by Buge »

alehul wrote: post #156
shkkmo wrote: post #151

Earlier quoted context omitted.

> A Ponzi scheme is when it's an investment vehicle (i.e. hedge fund) that provides returns to older investors through capital acquired from newer investors. Isn't that exactly what they did? From the Article: > Pincoin was particularly unique in that it offered bonuses for bringing other people into the program, a tactic that might sound familiar. The scammers paid out in cash until January when they began sending i…

Offering bonuses for bringing other people into the program is a Pyramid Scheme tactic. Ponzi is specifically in cases where there's a portfolio manager or something controlling the entire operation and allocating returns to early investors through distributing the capital of the new investors.

That's what Pincoin did

>The company first ran the Pincoin ICO, promising constant returns to investors

>Investors have been told that they would enjoy a profit rate of 48 percent a month from their initial investment, and recoup all investments after four months.

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