This article about a fintech savings account app - Yotta - locking users out of their deposits led me down into a Coffeezilla YouTube rabbit hole. It’s super entertaining to watch him expose Logon Paul’s cryptocurrency scam, and this one about taking down a $500,000,000 Ponzi scheme. Coffeezilla had previously pointed out that Yotta looks like a scam because it encourages deposits by offering a lottery that users “cannot lose” in.
As the saying goes: a sucker and his money will soon be parted.
I think it’s immensely admirable for Coffeezilla to expose fraud in the goal to return the money to victims. The cynic in me is having a difficult time not laying some of the blame on the customers. How on earth did these people miss the clear red flags? My friend sent me the article about Yotta, and before I even read the article, I remarked: “I bet the victims were enticed by the promise of abnormally high returns.” Sure enough, that was the case, as it were with many of the scams uncovered by Coffeezilla. Would it be unkind otherwise to label it greed?
It seems a non-insignificant amount of people cannot stand the slow progress of compound growth. Social media platforms make it look like everybody has more money than them. This feeling of inadequacy leads to the inquisitive: how can they get to that level, but very quickly? Everybody wants Warren Buffet’s wealth, but not that amount of time (read: decades) to get there. So of course when someone comes along to offer a shortcut, there’s no shortage of fools willing to take the bait.
I think a lot people simply wish to grow their money so that they can feel safe from the vagaries of capitalistic society. I certainly count myself in that cohort. Compounding is magical, but it takes a long time. That’s just the game. By the time you read about a hot investment on Reddit, it’s already too late for you. And if you see an offer of outsized returns, it’s absolutely fraud.
Let there be.