What does Ponzi scheme mean?

A Ponzi scheme is a fraudulent investment scam that promises high returns to investors with little or no risk. The scheme operates by using the money from new investors to pay returns to earlier investors, rather than generating legitimate profits through legitimate business activities. This creates the illusion of a successful investment opportunity, attracting more and more investors to contribute their money. However, as the scheme relies on a constant influx of new investors to pay returns to earlier ones, it is unsustainable and eventually collapses, leaving many investors with significant financial losses. The scheme is named after Charles Ponzi, who became infamous for running such a fraudulent operation in the early 20th century. Ponzi schemes are illegal and unethical, and those who orchestrate them can face severe legal consequences. It is important for investors to be wary of any investment opportunity that promises unusually high returns with little or no risk, as it may be a Ponzi scheme in disguise.