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#business #finance #fraud
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People are more aware of financial fraud than ever before, from crypto influencers to suspicious looking text messages we are all trained to be on high alert about everything…Unfortunately, the fact that we now suspect everything is a scam is a big reason WHY financial fraud is at an all time high. Society loves a con artist. Don’t believe me?
Think about this…
We are all celebrating Sam Bankman-Fried being convicted of defrauding millions of investors out of billions of dollars… for now…
But the same crypto enthusiasts that lost money when FTX collapsed probably at one point or another celebrated the wealth and excess of the Wolf of Wall Street… another convicted fraudster who stole millions of dollars from investors…
The future is clear, in 40 years the insufferable hustle bro’s will be liking inspirational quotes pasted over the top of SBF.
Ok that might be funny to think about, but it happens all the time.
The reported Erin Griffith with the New York Times wrote about the hundreds of fake companies with fake business plans and fake users being created to attract venture capital investment.
Firms like Sequoia, Andreesen Horowitz, and Accel had so much money that they couldn’t invest it into new ideas fast enough.
This started to encourage hopeful founders to fudge their numbers a bit to get life changing investments. There were companies that used the money and did built out a real business, but there were other companies that had to keep on lying as more and more investors piled in.
If you were a company founder trying to be completely honest about your business you would have found it much harder to get an audience with these investors to pitch your idea because you were competing with other founders who weren’t afraid to stretch the truth, or flat out lie, to tell the investors what they wanted to hear.
Cases like Charlie Javice who faked millions of users on her app FRANK before selling it to JP Morgan for one hundred and seventy five MILLION dollars [$175,000,000] or Abraham Shafi’s IRL, another APP that had millions of daily users that raised one hundred and fifty million dollars [$150,000,000] at a one BILLION dollar [$1,000,000,000] before an investigation by the board found that ninety five percent [95%] of it’s users were also completely fake.
From just these two fake apps that is a total of three hundred and twenty-five million dollars [$325,000,000] that could have been invested in real start-ups, but there are five reasons why fraud beats honesty almost every time.
The first reason that fraud has done so well even though people are more aware of it than ever is because nobody bothers checking anymore.
While good honest companies and people are held down with honesty and regulations scammers and fraudsters can just lie about how great their business is. The reason that they can get away with this for so long today is because fewer people are checking.
According to the remarks of their own administrators, organisation like the Securities and Exchange Commission, Federal Deposit insurance Corporation and the Federal Trade Commission don’t have enough resources to regulate market activity.
Eccentric founders had the luxury of shopping around for investors who were all desperate to get their money into whatever company was generating the most buzz, and the companies that could generate the most buzz, were the ones that could just lie about doing something that could change the world, if only it were true… Now big companies getting ripped off by a founders with questionable attire but that’s not where most fraud is happening.
Most fraud is targeted at regular people, and even if they don’t make any dumb mistakes themselves offloading the cost of scams onto people has become more lucrative than ever thanks to two other concerning trends…
So its time to learn How Money Works, to find out why the world thinks everything is a scam… except for scams…
27 май 2024
