Recently I have been interested in starting my own hyip.. But in researching on how to start it i found out that ponzi schemes are illegal (i didnt know that at first..) and that hyips violate the Securities Act of 1933 and the Securities Exchange Act of 1934. I have been trying to think of a way to get around these legal issues.
First i looked up the definition of a ponzi scheme. According to detailshere.com/ponzipyramid.htm for something to be considered a ponzi scheme it must follow all three criteria:
1. You must make an investment (any money paid to enter the venture) to get the right to recruit others into the program.....and
2. When you recruit another person into the program, you receive what the law calls "consideration". That usually means money, but can be anything of value......and
3.Your new recruit must make an investment to get the right to recruit, and they receive "consideration" for getting others to join.
So that got me thinking.. If i can skip one of those or change it in some way, will it not be considered a ponzi scheme? For example what if I dont give any commission (or "consideration" as they called it) for recruiting someone? Will this make it legal?
As for the Securities Act of 1933/1934, it seem to be exempt if its a private transaction. So if you were able to prove that it is a private transaction will it be legal?