A Ponzi or pyramid scheme gives itself away by where the payouts come from: profit is promised for the deposit itself and for the people you bring in, and it is paid out of new participants' money. Checking takes 10 minutes: look for a licence in the NSSMC or NBU registers, scan the NSSMC list of questionable projects, which already holds 477 names, and convert the promise into an annual rate. Income of 1% a day means over 3,600% a year, and no honest business earns that kind of money.
Oleksandr Suhak
16 min read
Since 2024 Ukrainian law has had a definition: a financial pyramid is fraud, or actions with signs of fraud, in which participants are promised passive income whose payment or size depends on attracting new investors. The rule sits in Article 158 of the law «On Capital Markets and Organised Commodity Markets». The definition covers creating the scheme, running it and promoting it, including through the media.
The mechanics never change. The organiser collects money, hands part of it to the first participants as «profit» and keeps the rest. The first payouts are real, and they are exactly what convinces the next wave. While more new money comes in than has to be paid out, the scheme lives. As soon as the inflow slows, payouts stop and the organisers disappear with whatever is left.
The scheme is named after Charles Ponzi, who in Boston in 1920 promised 50% profit in 45 days from supposedly reselling international postal reply coupons. He bought almost no coupons. He paid old investors with new investors' money. The largest pyramid in history was Bernard Madoff's: it ran for decades, and in 2009 a US court sentenced him to 150 years in prison. Compensation to victims was still being paid 16 years after the scheme was exposed.
Money is at risk in honest investments too: stocks fall, bonds can lose value, companies go bankrupt. The difference lies in the source of income and in who is responsible for your money. A legal instrument earns from the real economy, and its risks are described in documents. A pyramid earns only from new participants.
| Question | Legal investment | Network marketing | Financial pyramid |
|---|---|---|---|
| Where income comes from | Interest, dividends, growth in company value | Selling real goods to end customers | New participants' contributions |
| Is income guaranteed | Only on bonds and deposits, and it is moderate | No, it depends on sales | Yes, high and steady |
| Who supervises | The NBU or the NSSMC; there is a licence and a contract | An ordinary registered, tax-paying company | Nobody; the company is offshore or unregistered |
| Can you get out | Sell, or wait for maturity under the rules | Yes, you keep the goods | Only while new money keeps coming |
The line between network marketing and a pyramid runs through the product. If participants earn mostly by buying «starter packs» from one another, while nobody outside the network buys the product, those are already signs of a pyramid.
In December 2025 the National Securities and Stock Market Commission approved a list of signs of a financial pyramid. It is not exhaustive, so a scheme may show only some of them, but each one is a signal to stop.
In practice the signs are checked with simple questions. Where does the promised income come from? What exactly does the project sell, and to whom? What happens to your payouts if no new people join tomorrow? If the answers are vague («arbitrage», «artificial intelligence», «the fund's closed strategy») or the conversation turns to how much you will earn, you already have your answer.
Pyramids rarely quote an annual return, because it looks implausible. They usually say «1% a day», «5% a week» or «20% a month». Convert it, remembering that profit is added to the amount.
| Promise | Money grows in a year by | UAH 10,000 after a year |
|---|---|---|
| 1% a day | 37.8 times | UAH 377,834 |
| 0.5% a day | 6.2 times | UAH 61,747 |
| 5% a week | 12.6 times | UAH 126,428 |
| 30% a month | 23.3 times | UAH 232,981 |
| 20% a month | 8.9 times | UAH 89,161 |
| Ponzi, 1920: 50% in 45 days | 26.8 times | UAH 268,099 |
| Military government bonds now | 1.15 times | UAH 11,516 |
For comparison: the state's hryvnia military bonds currently yield about 15.16% a year, and the average rate on a one-year hryvnia deposit is 14.29% before tax. The promise of «1% a day» is 243 times more generous than the state. If someone truly knew how to earn that much, in two years UAH 10,000 would turn into 14 million, and they would have no need for your money. You can see how profit on profit works in the compound interest calculator: enter a realistic rate and compare.
Take a pyramid that promises 20% a month and has no income at all. In month one participants pay in UAH 1 million. Paying them 20% requires UAH 200,000 of new contributions. But the new contributions also have to be serviced, so the amount the project must raise every month grows with it:
| Month | New contributions in the month | Obligations to participants |
|---|---|---|
| 1st | UAH 200,000 | UAH 1,200,000 |
| 12th | UAH 1,486,017 | UAH 8,916,100 |
| 24th | UAH 13,249,475 | UAH 79,496,847 |
In two years the monthly inflow has to grow 66-fold. No advertising budget keeps up with a curve like that, which is why pyramids live from a few months to two or three years. The organisers know it and close the scheme before it collapses by itself.
In multi-level schemes each participant has to bring in, say, five others. At the first level that is 5 people, at the fifth already 3,125, at the tenth almost 10 million. Together with all previous levels, the 11th level needs over 61 million participants, more than live in Ukraine, and the 14th over 7.6 billion, almost the entire population of the Earth. That is why most participants of any such scheme end up on the bottom levels and lose money: they paid in but had no time to bring anyone.
Every scheme has a story about why exactly here you can earn more than anywhere else. The stories change with fashion, but the weak spot is the same: if the method really worked, big funds and banks would have used it themselves long ago, and nobody would be looking for small investors' money.
Classic pyramids with an office and contracts have almost disappeared. They have been replaced by online schemes that find people through social media and messengers. According to the NBU, in 2025 social engineering accounted for 90% of card fraud losses in Ukraine, meaning cases where people hand over money or data themselves. Investment schemes work in exactly this way.
| Scheme | What it looks like | What should worry you |
|---|---|---|
| Telegram «expert» | A channel full of luxury, «signals» and profit screenshots, then a closed group or a «personal manager» | Money must go to a private person's card or a crypto wallet; profits exist only in screenshots |
| Fake platform | A slick website or app with a personal account where the balance grows every day | No licence in Ukraine; withdrawals are refused, and you are asked for «tax» or «insurance» |
| Ads featuring celebrities | A video or «news story» in which a politician, businessperson or TV presenter recommends a «state investment programme» | The video is edited or AI-generated; the person's official pages say nothing about it |
| Paid tasks | A few dozen hryvnias for likes or reviews, then «premium tasks» that require a deposit | To earn more you must pay first; payouts stop after a large deposit |
| Online acquaintance | A new contact chats for weeks, then shares a «secret» way to earn on crypto | Talk of feelings slides into talk of money; the person never joins a video call |
| Tokens and «packages» | Buying tokens or shares in a farm, mining or property with guaranteed income | Guaranteed high returns and bonuses for recruits |
A separate genre is «recovering lost money». After the first loss, «lawyers», «Interpol» or a «compensation department» contact the victim and promise to get the money back for an upfront fee. This is the second wave of the same scheme. How it works and what to do is covered in the article on how to check a broker.
Before you transfer any money to a project, go through a few steps. They require no financial knowledge.
In August 2026 the NSSMC list of questionable projects held 477 names. The Commission regularly adds new platforms, often the same organisers under new names. Such schemes usually have no licence and no office in Ukraine, even though they use Ukrainian phone numbers.
Besides the five signs of a pyramid, the NSSMC has for years published signs of a questionable investment project. Most of them can be spotted without any expertise:
Almost all schemes go through the same stages, and they are worth knowing if you are already inside. At first everything works: payouts arrive on time, the project advertises heavily, recruitment bonuses appear. Then the promises grow, because the inflow has to be kept up: «new plans», «offer ends this week», contests for leaders.
Next come the delays. Payouts are postponed because of «technical work», a «security review» or a «platform update», and withdrawal limits and fees are introduced. Participants are often offered to swap their balance for the project's own token or move to a «new version 2.0», where the money is locked again for several months. The last stage: the website disappears, the chats are deleted, and participants are told that «hackers» or «regulator pressure» are to blame.
Investment fraud plays on emotions, so education and experience protect against it less than one might think. Schemes use a few predictable techniques:
The simplest defence is the 24-hour rule. Any decision to invest that demands haste, put off for a day and discuss with someone who is not part of the project. A genuine investment will not vanish in a day. Fraudsters, on the other hand, are rarely willing to wait.
If a friend invites you, remember that they are most often a victim too, one who sincerely believes in the project. The law counts promotion as part of a financial pyramid, so earning referral bonuses may cost you more than a friendship.
What to do if fraudsters gained access to your card or banking app is described step by step in the article fraudsters took money from my card.
The most frequent victims are people with savings and little experience of online finance, and teenagers promised easy money. A few family agreements work better than any instructions:
If you want your money to really work, start with legal instruments that have a licence and a clear risk. How to begin with a small amount is described in the article how to start investing.
Checked against official sources on October 30, 2026. If a figure changes, we update the article and the «Updated» date changes automatically.
This material is for information only and is not legal advice. The calculations are illustrative. Whether or not a project appears on the NSSMC list is not a final verdict on its legality: only a court decides that a fraud took place.
Spotted a mistake or an outdated figure? Let us know and we will check it against the primary source and fix it.
Write to redaktsiia@wm2.com.ua: what is wrong and, if possible, a source with the correct information. In Gmail or your mail app the page address will already be in the message.
Four steps to check a broker in the NSSMC registers, a legitimate vs fake broker table, foreign licences and an action plan if your money is gone.
Step by step: blocking the card, reporting to the bank and police, NBU rules and the Supreme Court position on when a bank must return the money.
A beginner's plan: emergency fund, government bonds from UAH 1,000, stocks and funds, taxes, checking a broker and what UAH 1,000 a month becomes over 10 and 20 years.