
Chinese police swoop on $7.6 Billion ‘record-breaking online Ponzi scheme’ - tristanj
http://www.scmp.com/news/china/economy/article/1908003/chinese-police-swoop-hk59-billion-record-breaking-online-ponzi
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kbart
Not surprising, if they even managed to run fake banks(0)..

0\. [http://www.bbc.com/news/blogs-news-from-
elsewhere-30932424](http://www.bbc.com/news/blogs-news-from-
elsewhere-30932424)

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wyred
Silly question here, why were the account books buried instead of burned? Do
the books have any use in future if they never got caught?

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maximmilius_rob
Why even have records in paper?

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dogma1138
You can't run a ponzi scheme without records the accounting skills needed to
run one successfully are probably greater than the ones needed to manage an
actual investment fund.

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maximmilius_rob
Actually, you don't need anything more than basic bookkeeping skills. What
surprises me is that it is an online ponzi scheme and yet they maintain
records on paper. This does not add up.

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dogma1138
Again you don't run a ponzi scheme on that scale using "basic bookkeeping
skills", you need to be a heck of an accountant to make sure that you have
enough cash flow to pay out returns and make enough legitimate investments and
constantly keep the money moving to make it appear that it's still there.

If you just base you ponzi scheme on I take 50% of every new payment and give
out the previous 50% to my previous investments it won't really drag on for
longer than couple of months, not to mention that you actually need to
generate allot of financial traffic to both draw people in initially and keep
the authorities of your back.

The reason ponzi schemes tend to snowball like this is because they run
exceptionally well many of them have actually made some decent return on their
investments (not anywhere near the actual percentage needed to balance out the
"management costs" ofc) a good ponzi scheme is almost indistinguishable from a
legitimate investment fund, they'll make tons of trades, constantly move money
around and keep large cash flows on hand to make it look like all the money is
still there, make regular payouts, and "silence" any panicked investor who
wants to cash out early.

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dangerpowpow
Those are usually not as hard as they sound.

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dogma1138
I don't know defrauding 1000's of people for years while keeping everyone in
the dark including most if not all of your employees and making yourself look
like a functioning legitimate business as far as casual financial inspections
go sounds pretty hard to me, at least as hard as running an actual investment
fund.

Regulators probe the market constantly if your trades don't add up at all
you'll get caught in a minute lasting years and managing to steal 100's of
millions or even billions of dollars doesn't seem something anyone could just
pull off, I think you underestimate the intelligence and skills required to
run these sort of scams.

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shaurz
Chinese people have amassed a lot of wealth but their investment options are
very limited. Hence the Chinese stock market bubble, property-building bubble
and Ponzi schemes.

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toomuchtodo
I think the problem is, there simply is no venue for them to invest in. Real
estate and the stock market, as you mentioned. The only other places would be
commodities, which are tanking.....due to demand falling off in China.

What do you do when there is nowhere to invest your excess funds? (not
rhetorical) You either invest in riskier asset classes, or you don't need to
generate as much income (work less perhaps?)

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kbenzle
How can one China Ponzi sheme have $7.5 billion, but the the best ponzi sheme
to date, bitcoin, market cap only stands at like $5 billiion?

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hamburglar
Bernie Madoff stole $18 billion in his ponzi scheme.

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broknbottle
reminds me of wcm777

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biot
That's a horrible site on mobile... it tries to do some weird app loading
thing, wants to consume additional local storage while a percentage counter
slowly climbs one percent per second with no content visible.

Better link: [http://www.dailymail.co.uk/wires/ap/article-3425972/China-
co...](http://www.dailymail.co.uk/wires/ap/article-3425972/China-company-
accused-fleecing-investors-7-6-billion.html)

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yuncun
First time I've ever seen Daily Mail cited as 'better link'

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biot
Yeah, I know... but in this case it's almost infinitely better. There were
others but Daily Mail had a few more images included in the article, and since
the content is from Associated Press anyways I didn't think people would mind.
However, my comment stands at -3 so lesson learned: everyone hates the Daily
Mail site. :)

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sharetea
The China's own ponzi economy will be mirroring the collapse of Ezubo .

"So in two short decades, China has erected a monumental Ponzi economy that is
economically rotten to the core. It has 1.5 billion tons of steel capacity,
but “sell-through” demand of less than half that amount.... The same is true
for its cement industry, ship-building, solar and aluminum industries—to say
nothing of 70 million empty luxury apartments and vast stretches of over-built
highways, fast rail, airports, shopping mails and new cities.

In short, the flip-side of the China’s giant credit bubble is the most massive
malinvesment of real economic resources—-labor, raw materials and capital
goods—ever known"

China’s Monumental Ponzi: Here’s How It Unravels
[http://davidstockmanscontracorner.com/chinas-monumental-
ponz...](http://davidstockmanscontracorner.com/chinas-monumental-ponzi-heres-
how-it-unravels/)

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kaonashi
That's not a Ponzi scheme; that really doesn't have _anything_ to do with
Ponzi schemes, I wonder why you even bring it up?

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Mikeb85
To shit on China? It's _de rigueur_ these days...

