A meeting of the organization in the city of San Pedro (Credit: weekly newspaper La Opinión de San Pedro)
San Pedro, the quiet Buenos Aires town of just over 70,000 inhabitants, is experiencing days of turmoil due to an investment scheme that promises its participants extraordinary returns: up to 1% a day in dollars. Thousands of neighbors have joined this “trading platform” that operates under the names RainbowEx and Knight Consortium, two companies that present themselves as innovators in the world of cryptocurrencies. However, growing warnings and suspicions suggest that a Ponzi scheme could be hidden behind this proposal, which has raised alarm bells in the community.
The main attraction of this system lies in the promise of doubling the invested capital in a period as short as 45 days. The platform has become a massive phenomenon, to the point that the activities of many neighbors are paralyzed at night when “La China”—the name used to identify a woman with oriental features who coordinates the operations—announces the opening. of the system for the purchase and sale of cryptocurrencies. Although a large part of the residents are convinced that this platform will allow them to earn large sums of money in a short time, others do not share that optimism.
The Ponzi scheme, named after Carlo Ponzi, a 20th century Italian fraudster, is based on continually attracting new investors whose funds are used to pay the first participants. Instead of making real investments, income comes exclusively from the capital that new participants inject. This type of fraud, like pyramid schemes, tends to collapse when the flow of new investors is interrupted or when too many participants try to withdraw their money at the same time.
In this case, it is worth clarifying what a “daily return of 1% in dollars” means, which is what the scheme promises. This is an interest rate that, for a one-year term, would be equivalent to 3,490% annually. 10-year US Treasury bonds, considered the safest investment in the world, currently yield 4% annually in dollars. No fixed income scheme can safely offer that return. The claim of such performance can only be false.
Maximiliano Firtman, a programmer who discovered what clearly seems to be a fraud, published a thread on the social network buying or selling a crypto and making 1%-2% daily profits. It is an APK installed outside the store, they are all non-existent crypto falopas, it is all simulation, but everyone is crazy believing that they are the Wolves of Wall Street.”
San Pedro has become the epicenter of this phenomenon. According to estimates, around 12,000 to 20,000 local people are involved in this system. The impact is such that residents who do not participate fear the consequences when the scheme collapses.
This fear is not unfounded. There have already been cases in Argentina of Ponzi schemes associated with cryptocurrencies, such as that of Leonardo Cositorto and his company Generación ZOE, which affected thousands of people. The collapse of that system led to complaints, arrests and a large number of victims who were unable to recover their investments.
Despite growing suspicions, the mayor of San Pedro, Cecilio Salazar, has opted for caution in his statements. In interviews given to local and national media, Salazar acknowledged that there are no formal judicial complaints about the platform and avoided describing it as a pyramid scam. However, he warned that “everything indicates that this is a verse, but that there are people who have made a lot of money in a short time.”
Many fear that when the scheme inevitably collapses, the economic and social repercussions for San Pedro will be devastating. As the platform becomes more popular, doubts are growing about how long it can sustain itself before collapsing. Ponzi schemes, as experts point out, need a constant flow of new participants to stay alive, but when trust fades or investors start wanting to withdraw their profits, the system collapses precipitously.
San Pedro is on alert, and although there is no formal investigation underway yet, neighbors watching from a distance fear that the consequences are inevitable. And it would not be the only town involved: cases of savers attracted by the scheme were also reported in the Buenos Aires city of Bahía Blanca.
