The Oldest Trick in the World
How Ponzi schemes have evolved from Wall Street to Addis Ababa and why Ethiopia is their latest frontier. It always begins with a promise. The details vary electric vehicles in Addis Ababa, cryptocurrency tokens in Dubai, certificates of deposit in the Caribbean but the underlying architecture is identical. You give someone your money. They give it, quietly, to the person before you. They pay you from someone else’s deposit. And for a while, sometimes a long while, everyone appears to be getting rich. This is the Ponzi scheme: the most durable financial fraud in human history, named after Charles Ponzi, a Boston-based Italian immigrant who in 1920 raised $15 million in eight months by promising 50 per cent returns in 45 days. The promise was impossible. The returns were paid entirely from incoming investors’ capital. When the flow of new money slowed, the structure collapsed overnight, ruining thousands. Ponzi went to prison. His name entered the dictionary.