blog posts

What is a panzi scheme and how do we know it?

What is Panzi Plan?

A panzi scheme is a scam in which a scammer or panzi designer promises ignorant people that if they give him their money, he will work with that money and give astronomical and guaranteed profits to investors. 

If somewhere you were promised astronomical and guaranteed profits (for example, more than 10% per month) for your money, you are probably on the side of a panzi trick that wants to put a big hat on you and seize the capital that you have worked for years.

In this article, in simple language, you will get acquainted with Panzi and pyramid schemes and how to detect and identify them.

Initially, to gain more trust, new people pay interest on old people to attract more investors to the system. The scheme is eventually ruined due to saturation and the lack of a new investor, and the scammer usually runs away with a lot of money.


To better understand the Panzi scheme, consider the following example (names and numbers are hypothetical):

Genghis is a swindler who intends to do a panzi trick. He sets up a fake company or site and promises people that if each of them pays, say, 1 million tomans, he will invest the money in the New York Stock Exchange, digital currencies or anywhere else, and 200,000 a month. Toman (20%) pays guaranteed interest to investors.

But in reality there is no investment and only play with money.

After some time of advertising and attracting initial investors, now Genghis has raised millions of Tomans. In order for the project to continue and attract more money, Genghis will pay the interest of the  new investors from the money of the new investors . This allows old, first-time customers to introduce the scheme to friends and acquaintances, and newer investors to enter the field.

After good money is raised or when no new investor is found, Genghis runs away with the money and the plan falls apart.

The Internet has made the Panzi designs so popular that it is easier to advertise and receive money, and the designer can remain anonymous.

Comprehensive infographic to get acquainted with Panzi design:

Click on the image to see the full size

Where does the name Panzi plan come from?

Charles Ponzi’s name is derived from the name of Charles Panzi, one of the most famous swindlers in history. By selling discount coupons to the post office, he promised investors a 50 percent profit in 45 days or a 100 percent profit in 90 days. Panzi’s method was to use the capital of former investors as well as new investors to pay the profits of the first ones. Charles Panzi was able to defraud more than $ 20 million in the United States with his innovative design in the 1920s.

Charles Panzi

Charles Panzi, inventor of the Panzi scheme

How long does a Panzi plan last?

As mentioned above, the Panzi plan will continue until there are enough new investors or the designer is satisfied with the amount of money earned. The designer no longer makes a profit after a large amount of money is raised or other new investors do not enter the field as needed. As a rule, escalation and population usually do not last more than two years.

How does the Panzi scheme work?

In general, all Panzi designs follow the same cycle, but how they work can be slightly different. The core of all Panzi designs is the same, but the appearance and type of claims are different.

Main cycle in all Panzi designs:

1- Deceptive advertisements

Initially, with fake ads (usually on the Internet or social media), a few people are attracted to the system and invest a small amount. Some Panzi plans also use marketing methods that will increase profits if a new member logs in.

2- Deposit initial profits and gain trust

Profits are deposited regularly to gain more confidence for more money and new investors. These profits are paid either with the money of new investors or with the initial capital of the designer.

3- Receiving a large amount of capital

After gaining people’s trust, a huge wave of capital enters the system. Older investors also invest more money and even invite close friends and acquaintances to the project. At this stage, blind prejudice causes some investors to even take out heavy loans or even sell their house or car.

4- The collapse of the plan

Items 1 to 3 are repeated several times until there is no new investor or a large amount of money has been raised. After that, the designer picks up the coins and disappears.

Panzi scheme detection

Panzi plan

Although Panzi scams come in many forms, all of them have a number of key features, including:

Astronomical and guaranteed benefits

The promise of astronomical and guaranteed profits is one of the main features of a Panzi scheme. Wherever you see this promise, doubt that it is Panzi. Profit astronomical means that if you are going to work with your money, the profit is still lower than the Panzi scheme. For example, fish with more than ten percent guaranteed profit is very suspicious. Think about how such a profit can be guaranteed without any risk?

Anonymity of the designer

There is not much information about the team or manager in a Panzi scheme, and even if there is, pseudonyms or fake names are often used. A Panzi designer definitely does not want to be identified.

Lack of transparency in activities

A Panzi scheme does not fully explain how it earns its astronomical profits and how it guarantees it. For example, some schemes say they invest users’ money in capital markets or digital currency extraction, but do not say how they do it or how they are safe from the risk of price fluctuations, difficulty extracting, and so on.

No valid contact information

Panzi schemes usually do not disclose valid addresses and telephone numbers or resort to fake addresses and multi-day offices. Anonymity is one of the main features of a Panzi scheme.

Strange ways to make money

The designer tries to get the money from illegal portals or these days through digital currencies so that it is difficult for the police to track it.

Lack of legal permits

Panzi projects cannot obtain legal permits. Of course, sometimes it is such a professional scheme that it also deceives the legislature or obtains a license through gangsterism.

Differences between pyramid and panzi design

The Panzi scheme has many similarities to the pyramid scheme, which often leads some users to equate the two. But the fact is that the pyramid scheme is not exactly the same as the Panzi scheme, and a number of features distinguish them.

What is a pyramid scheme?

The pyramid scheme is a model that promises individuals that they will receive astronomical profits if a new member is brought into the system and invested. A pyramid scheme can include a set of goods or services that must be purchased by a new member in order for the benefit to accrue to a senior.

To better understand the pyramid scheme, consider the following example (names and numbers are hypothetical):

A pyramid scammer has some worthless soil. He propagandizes a lot and falsely claims that his soil is different from other soils and that if the plant’s feet are shed, it will grow faster. Therefore, the price of soil is higher compared to other soils in the market. He offers an ignorant person named Mohammad to buy some land for his house for 100 thousand tomans. But this is not the whole story.

The swindler tells Muhammad he can get rich with his pyramid scheme. In this way, if he invites his friends and they buy dirt, he will make a profit in a pyramid and up to several levels. So the scammer can easily sell his regular product at several times the market price, and if there is no sale, he does not have to pay interest. He uses Muhammad as a tool to promote his worthless product. Advertising whose return is guaranteed.

There are two scenarios for the future of this project:

1- Until the new members arrive, the plan continues and the scammer easily pays the profit because he was able to sell his worthless product at a high price and there is no reason not to make a profit. After some time the new members do not enter, the higher members will not receive any profit and the plan will be destroyed automatically.

2. After a while, the scammer can not even give the product and run away with the large amount of money he has collected.

To learn more about pyramid designs, you can watch the following video, which has been prepared in Persian:

Similarities between Panzi and Pyramid

  • Both empty the pockets of victims by promising astronomical profits.
  • Both need to attract new members to survive.

Differences between Panzi and Pyramid design

  • The Panzi scheme claims to invest money in the market, but we are on the side of a pyramid scheme with a range of products or services.
  • The Panzi scheme may not be networked, but it is a networked pyramid scheme, in which older members invite newer members.
  • And The Panzi scheme is a complete scam and the law deals with it, but the pyramid scheme, while fundamentally problematic, can also be legal.

To better understand the difference between pyramid and panzi designs, you can watch the following video, which has been prepared in Persian:

Panzi and pyramid schemes in digital currencies

Digital currencies have a number of special features that make it much easier for Panzi and pyramid scammers, and these days most Panzi schemes are launched using these currencies.

Tracking digital currency transactions is much more difficult than traditional methods such as banking, there is no need to create a bank account to send or receive funds, and there are fewer traces of fraud. Also, digital currency transactions are not limited to a specific country and capital can be attracted from all over the world.

For these reasons, digital currencies are a good way to make Panzi plans, and it is much easier to raise capital and pay interest than traditional methods.

BitConnect – The Biggest Five in the History of Digital Currencies

Bitconnect was a digital currency investing and lending platform that came to prominence in 2017. Its digital currency, BCC, was priced at more than $ 500 at the top of the market, and was supported by reputable exchanges.

In January 2018, after examining the activities of this regulatory body and identifying Panzi scam, BitConnect collapsed. The BCC token lost more than 90% of its value in less than a few hours after the news broke. In the same month, the value of this digital currency dropped from $ 400 to about $ 7, and now at zero, it is a dead digital currency.

BitConnect price chart

The bitcoin price chart (BCC) shows a sharp fall

Cloud mining

A large part of Panzi scams in the field of digital currencies to websites Cloud Mining Are dedicated to claiming with the money of investors to act Extraction of digital currenciesthey do. Most of these sites use the Panzi method and pay dividends from new investors to old ones. Astronomical and guaranteed profits without considering mining risks, lack of transparency in how to work, lack of valid address or telephone number and و are the signs of Panzi mining plans.

Cloud mining is possible, but a reputable cloud mining site only sells hash power, not claims a guaranteed astronomical profit at a fixed, regular rate.

Selling worthless tokens

This method is not a panzi or pyramid in itself, but it is a complement to Panzi and pyramid schemes. The way these schemes work is that they first receive large sums of money in the form of bitcoins or valid digital currencies from people to pay them guaranteed benefits. But in the end, they pay for it with their own digital currency, which has no value and gives people hope that its price will rise in the future.

Hype Panzi

Extraction of digital currency in telegram robots

Telegram robots are another scam that make money for their creators out of nothing. The promise and how these robots work is usually as follows:

The user joins the robot and receives some diamonds as a gift to get started. With those diamonds, virtual mining machines can be purchased in the robot to mine bitcoins. There are several ways to get more diamonds, the most important of which are:

  • Invite your friends and get a diamond gift using the membership link
  • Buy diamonds using bitcoin

But in these telegram bots, no extraction takes place and only forces users to pay bitcoins to buy more diamonds. Users who choose the recruitment method will eventually receive a message stating that your subscriber must have bought with Diamond Bitcoin to withdraw the withdrawn funds. In this way, in order to receive profits, your subset must make a purchase. This is a very advanced Panzi scheme.

Investing in real estate, cars, stock exchanges, energy and…

Another type of panzi scheme in digital currencies that is very common is websites that claim to invest investors’ money in foreign markets such as real estate, cars, stock exchanges, energy, or anything else. Some of these sites even issue fake ownership documents to a user who, for example, has bought ten meters of a house in New York.

It is very easy to identify such websites by the methods mentioned above.


The Panzi scheme is a scam method that attracts victims of capital by promising guaranteed and astronomical profits. To gain more trust, fraudsters pay investors a guaranteed return in the first few months. This is done using the money of new investors. After a while, a lot of money was attracted and no new investor entered the system, the scammers no longer pay and run away.

It is not difficult to distinguish Panzi designs at all. The most important feature of these schemes is guaranteed astronomical benefits and anonymity. Due to the nature of digital currencies in the privacy of transactions and the absence of sanctions, these days we are witnessing an increase in the activity of Panzi projects in the field of digital currencies, until the legislators, the investors themselves have the main responsibility.

If you have experience with Panzi designs, please share it with us in the comments section of this post.