Friday, June 24, 2016

Peer to peer lending - another ponzi scheme?

An IT expert told me that many people are losing their capital on peer to peer lending. This was supposed to be a platform to allow
small businesses to borrow working capital and provide a good interest rate to the investors.

The promoters were able to pay a good interest rate on the lending at the initial period. After a while, the promoter disappeared and the investors lost their money.

TKL - This sounds like another ponzi scheme. The promoter took the investments of the later investors to pay the attractive return to the early investors.

As more people pour in money to invest in this scheme, the promoters were able to pay the high interest rate, while siphoning off a significant portion of the investments.

Another ponzi scheme in the making. Wow!

1 comment:

Anonymous said...

I wonder which P2P platform that IT expert was referring to. As far as I understand, the interest they are paying the lenders are charged to the borrowers. Most "platforms" only act as middlemen and charge a fee for their services (some provide in-house collection services). Most of these platforms are regulated and money goes through them in trusts accounts.

ps. I'm talking about some overseas P2P platforms that I have come across, not sure what's the situation in Singapore is like.

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