Let’s be honest; everyone loves the idea of making easy money. But if it sounds too good to be true, chances are it’s a Ponzi scheme.
These scams are like shape-shifters. One day it’s about real estate, the next it’s crypto, and the next it’s stock tips.
In India, several alleged Ponzi-style schemes have surfaced over time, with names like Farm Wealth, Nova NFT, FriendsIncome and others drawing public attention.
In this blog, let’s break down how to identify a Ponzi scheme before it wipes out your savings.
Ponzi Scheme Meaning
A Ponzi scheme is like a financial illusion. Instead of making money from real business or investment activity, the operator pays “returns” to existing investors from the capital of newer investors.
No actual profits. No real business. Just a game of passing the parcel, until it bursts.
This type of scam is named after Charles Ponzi, a guy from the 1920s who promised crazy profits through international postal arbitrage.
Spoiler alert: it didn’t work.
To understand how a Ponzi scheme works, let’s take an example:
Let’s say a company named ABC comes up with an investment plan and promises a guaranteed return of 5% per month. Finding it to be a better option for financial stability, Mr X invests ₹1 lakh in it.
Later in the month, the same promise and scheme are presented to Mr Y, and he invests ₹5 lakh.
As per the promise, ABC company has to provide ₹5000 to Mr X. They give this ₹5000 either from Mr X’s own investment or from the money invested by Mr Y.
Similarly, they keep on adding Mr Z, whose money is then used to pay Mr Y.
They continue bringing in new people who invest varying amounts into the scheme, and to provide returns to old investors, they use the capital of the new ones.
The scheme continues for months or even years until it becomes difficult to bring in new investors or until the company collects enough funds.
Once one of these points is reached, the scheme collapses, and the company vanishes overnight with the hard-earned money of the investors.
How to Detect a Ponzi Scheme?
Initially, on coming across tempting offers and huge returns, investors do not pay attention to the darker side.
Without any proper analysis or questions, they just end up putting their hard-earned money or lifetime savings in the scheme with the hope of growing it 2x or 3x in the shortest time.
However, later delayed payments or falling out of the scheme make them realise the scam.
If you don’t want to be part of such a crowd, then learn to read between the lines and catch the hints that these fraudsters provide themselves.
1. Unrealistically High Returns with Guaranteed Profits
If someone says, “Invest ₹1 lakh today and get ₹2 lakhs in 40 days, guaranteed,” hit the brakes.
Every legitimate investment: stocks, mutual funds, and FDs, comes with some level of risk.
High and guaranteed returns?
That’s a fantasy Ponzi peddlers sell.
What to ask: “How are you generating these returns?”
If the answer is vague or filled with buzzwords like “secret algorithm,” “insider strategies,” or “auto-trading bots,” that’s your cue.
2. Consistent Profits Even in Volatile Markets
Markets are moody. Even the best fund managers don’t make money every single month.
If someone claims 3–5% monthly profits no matter what, it’s not smart investing; it’s likely fake.
3. No Clarity on the Business Model
If the platform can’t explain clearly where the money is being invested or how returns are made, that’s a red flag.
For example: “We invest in forex through AI-based strategies and use capital rotation models in the crypto space.”
In simple terms, they make the information so complex that you won’t understand a thing.
That’s exactly how they want it.
4. Referral or Recruitment-Based Incentives
Ponzi schemes often disguise themselves as MLM or affiliate marketing platforms. You’re pushed to bring in new people, and your income depends on their investment.
They offer something like: “You’ll get 10% commission for every new member.”
This isn’t investing, it’s recruitment. If the business runs only because new people are joining, it’s a red flag.
5. Lack of SEBI Registration or Regulatory Approval
In India, anyone offering financial advice or investment plans must be registered with SEBI or RBI (depending on the service).
These Ponzi schemes are unregistered or use fake licenses.
6. Delay or Denial in Withdrawals
This is usually the final stage of a Ponzi scheme.
When new money stops coming in, they start blocking withdrawals, making up stories like “audit issues,” “RBI regulations,” or even “technical glitches.”
Ponzi Scams Case Studies
Such scams often operate on a larger scale, with some eventually being exposed while others remain hidden.
Here are some of the cases that have come to light, resulting in the loss of crores of investors’ capital:
Thanawala Wealth Management
A recent investor approached us after suffering significant financial loss through an investment arrangement introduced via a trusted family relative.
He was told about attractive, steady returns offered by Thanawala Wealth Management / Thanawala Investment.
The offerings included:
- A “prop desk algo” plan promising 2% fixed monthly returns through pooled algorithmic trading.
- An IPO investment opportunity in Vikram Solar shares with assured profits.
- A promissory note was shared to formalise the arrangement.
For the first two to three months, the promised 2% payouts were credited on time. This built confidence and encouraged further investment.
However, payments suddenly stopped. The IPO shares were never delivered, and the principal amount was not returned.
The investor suffered a loss of approximately ₹30,00,000.
Within his network alone, collective losses reportedly touched nearly ₹150 crore.
Modus Operandi:
- Early Trust Building: Initial monthly payouts created credibility and encouraged higher investments.
- Guaranteed Returns Narrative: Fixed 2% monthly returns and assured IPO profits reduced investor suspicion.
- Sudden Withdrawal Issues: Once larger amounts were invested, payouts stopped, and communication weakened.
It is important to clarify that it cannot be conclusively established whether the transactions were directly conducted by Thanawala Wealth Management itself or by individuals possibly misusing the brand name to gain investor trust.
Falcon Ponzi Scheme Scam
Falcon Capital Ventures Pvt Ltd operated a fraudulent investment scheme under the guise of an invoice discounting platform, promising investors annual returns of up to 22%.
The company claimed to facilitate investments in invoices from reputed firms like Amazon and Britannia, attracting nearly 7,000 investors across India between 2021 and 2025.
Modus Operandi:
- Fabricated Business Model: Falcon created fake vendor profiles and non-existent invoice deals to present a facade of legitimacy.
- Ponzi Scheme Structure: Returns to earlier investors were paid using funds from newer investors, without any genuine revenue-generating activities.
- Diversion of Funds: A significant portion of the ₹1,700 crore collected was funnelled into shell companies and unrelated ventures, including cryptocurrency platforms and luxury services.
Collapse and Aftermath:
By January 2025, the scheme unravelled as new investments dwindled and withdrawal requests surged. Falcon ceased operations, leaving investors unable to retrieve their funds.
Authorities arrested two key officials, while the primary accused, founder Amardeep Kumar, remains at large.
Approximately ₹850 crore of investor funds are unaccounted for, with many victims having lost their life savings.
The ₹50 Crore Arbuda Ponzi Scam
Arbuda Credit Co-operative Society Ltd, based in Mount Abu, Rajasthan, orchestrated a fraudulent investment scheme that defrauded thousands of investors across Rajasthan and Gujarat.
The company promised high returns of up to 18% on fixed deposits and offered easy loans to attract deposits.
However, in January 2025, the founders, Rakesh Agarwal and Asha Agarwal, went untraceable, leading to investigations by the Economic Offences Wing (EOW) of the Rajasthan Police.
Modus Operandi:
- False Promises: Investors were enticed with offers of high returns on fixed deposits and easy loans.
- Multiple Branches: The company operated 47 branches in Gujarat and a head office in Mount Abu, collecting substantial deposits.
- Untraceable Founders: The founders disappeared in January 2025, leaving investors without access to their funds.
Impact:
- Widespread Fraud: Over ₹50 crore was collected from investors, with many unable to retrieve their investments.
- Legal Action: Multiple FIRs were filed in Gujarat and Rajasthan, and investigations are ongoing to trace the culprits and recover the defrauded amounts.
How to Protect Yourself from Ponzi Schemes?
First and foremost way to protect yourself is to stay away from offers providing a quick-rich scheme.
Other than this, there are a few tips that you can use to identify a Ponzi scheme and avoid falling into the trap.
- Always DYOR (Do Your Own Research): Google the company, search for complaints, and check for news coverage. If there’s even a whiff of fraud, walk away.
- Verify Registration with SEBI: If it’s an investment advisory or portfolio service, it must be registered. No registration = big problem.
- Avoid “Guaranteed” Income Schemes: Especially if they promise daily or fixed income through crypto, gold, or forex.’
- Ask Direct Questions: If the answers don’t make sense or they get defensive, that’s a red flag.
- Talk to a Trusted Financial Advisor: If something sounds too good, ask a professional before putting your money in.
How to Report a Ponzi Scheme?
Now, if you have been unfortunate and fallen victim to one such scheme, then it is not the time to panic.
Instead, get up and find the right way to get your money back.
Yes, you read it correctly, you can get your lost money back by reporting it on time by following the right process & protocol.
Register with us now, and our team will help you in filing it and processing the recovery of your losses.
Here’s how we assist you:
- Case Evaluation: We review your investment documents, chats, bank statements, and agreements.
- Regulatory Complaint Filing: Assistance in filing complaints with the Securities and Exchange Board of India (SEBI), Reserve Bank of India (if applicable), and relevant authorities.
- Cyber Crime Reporting: Guidance to register complaints on the official cybercrime portal and local police station.
- FIR & Legal Follow-up: Support in drafting structured complaints and tracking progress.
- Recovery Process Guidance: Strategic direction on available legal remedies for fund recovery.
Early reporting increases the probability of freezing accounts and tracing fund trails.
Conclusion
Ponzi schemes don’t collapse overnight; they grow quietly on trust, urgency, and unrealistic promises.
The pattern is almost always the same: early payouts, aggressive marketing, and sudden silence.
The moment someone guarantees high returns with zero risk, pause. Ask questions. Verify registrations.
Your money deserves caution, not excitement.
Because in investing, steady growth beats flashy promises, every single time.
