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The practice of betting on the future price of a commodity, asset, or financial instrument is known as futures trading, and it is one of the more common investing strategies. Trading futures may be a legitimate financial strategy; but, it has also become a target for con artists who are attempting to take advantage of individuals who do not fully understand the risks involved.
One notable example of a scam using futures trading is the LogicBitInvest Ponzi scheme, which resulted in the loss of millions of dollars for the investors involved. This article will discuss the specifics of the LogicBitInvest Ponzi scheme, how it functioned, and how potential investors might prevent themselves from falling victim to schemes like it in the future.
What exactly is a Ponzi scheme like LogicBitInvest?
The fraudulent investment scam known as the LogicBitInvest Ponzi scheme guaranteed investors significant returns on their investments via the use of futures trading. A corporation known as Logic Bit Ltd, which pretended to be a genuine investment firm situated in the United Kingdom and ran the scam, is responsible for its operation. The organization presented potential investors with the option to put their money into futures trading, with weekly returns of up to 15% of their initial investment guaranteed.
According to the United States Securities and Exchange Commission (SEC), the plan made use of investor funds to pay returns to current investors rather than investing the money in genuine futures trades. This was done rather than investing the money in actual future transactions. This is a common indicator of a Ponzi scheme, in which rewards are paid out using fresh investor money rather than real profits earned via investments. This is in contrast to a legitimate business model, in which profits are generated through genuine investments.
The plan was run by a group of persons who were located in the United Kingdom, Russia, and India. In order to perpetrate the fraud, the group employed fictitious names and aliases. Over its two years of operation, the scam was responsible for the theft of almost $2.5 million from several investors.
What was the LogicBitInvest Ponzi Scheme’s Method of Operation?
A website and several social media platforms were used in the operation of the LogicBitInvest scheme in order to generate interest from prospective investors. According to the information provided on the website, LogicBitInvest Ltd was a respectable financial company that specialized in the trading of futures. The website also made the claim that the organization had a group of seasoned traders on staff, each of whom had a proven track record of delivering substantial returns on investment to customers.
The firm established a referral program as a means of luring potential investors into the scheme. Existing investors were promised a bonus for each new investor that they brought into the plan. This assisted in the formation of a network of investors who were encouraged to contribute more money to the plan as a result of the incentive.
When investors contributed their money to the plan, the business made the promise that it would put the money to work in the futures trading market. The SEC claims that the business did not really participate in any futures trading during the relevant time period. Instead, the firm exploited the monies contributed by investors to create the appearance of a lucrative investment opportunity by paying returns to previous investors using those funds.
Moreover, the organization fabricated investor account statements to give the impression that the investors were making money off of their investments. These account statements were fictitious and did not represent any genuine buying or selling that took place.
As the plan progressed, the firm started to run into cash flow issues since it had a hard time luring in sufficient new investors to repay the dividends that were owed to the previous investors. In the end, the scam was exposed as a fraud, and many investors were left with considerable losses.
How many individuals protect themselves from being taken advantage of in the futures trade?
Scams in the futures trading industry, such as the LogicBitInvest Ponzi scheme, may be difficult to spot since they often use deceptively complex methods to give the impression that they are offering a genuine investment opportunity. Nonetheless, there are several precautions that investors may take to guard themselves against being taken in by schemes of this kind.
Do Some Research
It is essential to do sufficient research before putting money into any futures trading opportunity before you do so. This requires doing research not just on the business that is providing the potential for investment but also on the persons who are behind the firm. Investigate the history of the firm, as well as its trading techniques and past performance in terms of producing returns on investments.
Be Cautious With Very High Returns
Any investment offering that promises returns that are much higher than average should raise red flags for potential investors. Futures trading is an investing technique that has a significant level of risk, despite the fact that it offers the opportunity for big rewards.
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