Economic Crisis Drives Widespread Ponzi Scheme Epidemic, Leaving Argentines in Financial Ruin
In the midst of Argentina’s deepening economic crisis, a new plague has struck – the “ponzidemia,” a wave of Ponzi schemes that has swept the nation, leaving thousands in financial despair. The town of San Pedro, a quiet place known for its oranges, has become the epicenter of these fraudulent schemes that have exploited Argentina’s economic hardship, affecting as much as 30 percent of its population.
The financial devastation came through an investment app called RainbowEx, which promised users up to 2 percent in daily returns paid in cryptocurrency. “I trusted it, as did some in my family,” said Carlos Rodriguez, a 66-year-old resident of San Pedro. Rodriguez, who initially saw the app generating returns of $80 to $100 daily, soon realized the promise of easy money was an illusion. He ended up losing nearly all his savings.
San Pedro’s mayor, Cecilio Salazar, estimates that between 15,000 and 20,000 residents of the town, which has a population of about 70,000, invested in RainbowEx, leading to an estimated $49 million in losses. “We’re looking at a $49 million scam,” remarked Adolfo Suarez Erdaire, a lawyer representing hundreds of victims. He added that his office has been inundated with calls from people all over Argentina who have suffered similar losses.
This type of Ponzi scheme, which uses new investors’ funds to pay returns to earlier investors, has become a familiar story across Argentina. In recent weeks, authorities in the Chubut and San Juan provinces, along with Santa Fe and Cordoba, reported similar alleged schemes linked to a platform called Peak Capital, which shut down abruptly on October 18. “There are thousands of victims,” confirmed the prosecutor’s office in Chubut, noting that the losses from these schemes amount to millions of dollars.
Maximiliano Firtman, an IT expert who investigated RainbowEx, highlighted the alarming reach of the scheme. “There is an epidemic,” he said, describing how he traced the scam’s origin to a luxurious hotel event in Buenos Aires. Two Polish actors, posing as American executives, presented RainbowEx to potential investors at the event. The platform, allegedly based in Singapore, demanded an additional $88 from users attempting to withdraw funds, which many paid without ever recovering their investments.
As the Argentine economy grapples with one of the highest inflation rates in the world and widespread poverty, many of these scams have preyed on the public’s desperation for financial relief. Sociologist Ezequiel Gatto attributes this phenomenon to the “gamification of money,” noting that young Argentines, severely impacted by poverty, are particularly vulnerable. “There are 19-year-olds who are teaching 16-year-olds how to become a millionaire in three months,” Firtman explained, describing how speculative platforms entice users with game-like interfaces.
The current economic crisis has pushed Argentina’s poverty rate above 50 percent, with the young especially hard-hit. According to government figures, 60.7 percent of Argentines aged 15 to 29 live in poverty, a statistic scammers have exploited.
Argentina’s most infamous alleged fraudster, Leonardo Cositorto, remains on trial for fraud after convincing thousands across Latin America and Spain to invest in ventures ranging from cryptocurrency to hamburger franchises. Promising a staggering 7.5 percent return per month, Cositorto inspired a Netflix documentary but now faces charges in a high-profile case that has captured the region’s attention.
Argentina’s battle with the “ponzidemia” highlights the country’s vulnerability amid its economic woes. As scams continue to proliferate, the public faces a challenging road to financial recovery.
