I can’t say for sure but it sounds like a Ponzi scheme. You get some investors. You lie on paper that they’re making lots of money. If anybody wants to withdraw, you give them the money from other investors to make it look like anybody can withdraw whenever they want. But there isn’t enough to cover all of the withdrawals because you’ve lied about the profits. Then you get more investors. And more investors. You promise if they keep their money in your investment a long time they will make way more than the initial withdrawers. They were silly to sell when everyone is still making so much money. As long as investors continue to add money to the pool you can pay off the few people who want to withdraw. At some point it becomes untenable to pay everyone off and continue to look legitimate and so you just withdraw all the money and run.
Yeah it’s a big red flag but how did it work?
I can’t say for sure but it sounds like a Ponzi scheme. You get some investors. You lie on paper that they’re making lots of money. If anybody wants to withdraw, you give them the money from other investors to make it look like anybody can withdraw whenever they want. But there isn’t enough to cover all of the withdrawals because you’ve lied about the profits. Then you get more investors. And more investors. You promise if they keep their money in your investment a long time they will make way more than the initial withdrawers. They were silly to sell when everyone is still making so much money. As long as investors continue to add money to the pool you can pay off the few people who want to withdraw. At some point it becomes untenable to pay everyone off and continue to look legitimate and so you just withdraw all the money and run.