From FBC to Hoogpool: How Egypt’s Digital Gold Rush Became a Trap for the Gullible. As Ponzi Schemes Resurface in New Tech Wrappers, Dreams of Quick Riches Turn into Financial Ruin—and Experts Warn: ‘This Won’t Be the Last.’
Recently, the digital space has become fertile ground for scamming citizens in various ways. Dozens of illegitimate platforms have emerged, preying on the dreams of ordinary people with promises of quick wealth and lucrative returns. It’s a recurring story, filled with scenes that leave people puzzled and questioning why citizens keep falling into these traps.
One of the latest cases involves FBC, an online investment platform that described itself as a legitimate opportunity. It became a glaring example of financial fraud in several Arab countries, including Egypt and Jordan. The platform targeted hundreds of citizens, promising attractive returns on their investments. It started by registering new users for a fee of EGP 720 ($15), attracting many who were seeking quick income without realizing the potential risks.
Over time, the shiny promises turned into a nightmare. The platform imposed strict withdrawal restrictions, causing panic among investors. Eventually, it shut down completely. Several victims filed official complaints, leading to investigations by Egyptian security authorities. This incident serves as a harsh lesson on the importance of verifying the credibility of investment platforms before making any financial decisions.
FBC relied on a well-known fraud strategy called the “Ponzi scheme”, where returns for older investors are paid using funds from new investors. Initially, the platform paid regular returns, building trust and encouraging investors to pour in more money. As the number of users grew, the platform changed its policies, imposing withdrawal restrictions and manipulating investment terms.
In February, users were shocked by the sudden shutdown of the platform. All the money invested by users disappeared, along with the dreams FBC had promised. The platform claimed it had suffered a massive cyberattack that resulted in billions of dollars in losses. However, it later became clear that these claims were just a ploy to steal money, leaving victims in a state of panic and despair.
According to media reports, the company’s representative in Egypt hosted a business dinner for victims and a small party at the Yasmine Hall on the Corniche in Imbaba, just days before the app was shut down and the scam was revealed. During the event, the representative urged attendees to bring in more customers, promising significant profit increases. He also encouraged them to expand the platform’s reach by involving relatives and friends.
Is FBC the First? Will It Be the Last?
Without a doubt, the FBC incident is not the first of its kind in Egypt. Over the years, the country has witnessed numerous scams targeting citizens’ aspirations for quick and massive profits.
One of the most notable cases was the “Al-Rayyan” scandal occured in the 1980s, where thousands were lured by promises of huge financial returns through what were then called “money management companies.” The story ended with many losing their savings and suffering significant financial and psychological shocks.
More recently, Egyptian society has been plagued by numerous “Ponzi schemes” or “pyramid schemes”, often disguised as multi-level marketing (MLM) businesses. One such example is Xianel, which opened an office in Egypt in the mid-2000s before its operators were arrested.
Another similar case is the Hoogpool investment platform. In March 2023, Egyptians woke up to another scam after Hoogpool was shut down. The platform had attracted 600,000 Egyptian users, claiming to rent Bitcoin mining machines and offering investment opportunities with daily profits ranging from 250 to 300 Egyptian pounds.
These scenarios repeat due to several factors, including the desperate desire of many to improve their financial situation quickly, coupled with a lack of financial and investment awareness, making them easy prey for scammers.
These illegitimate entities exploit modern technologies and social media to reach as many victims as possible, using enticing marketing tactics and misleading advertising campaigns.
Common Traits in Scams
As the old saying goes, “Greed builds a house, but poverty lives in it.” These platforms lure victims with dazzling promises of high returns that far exceed normal market rates, along with false guarantees of no risks. They also encourage participants to bring in relatives and friends, creating a false sense of trust and expanding the circle of victims. Greed and the desire for quick, easy wealth fuel these schemes.
Initially, these platforms build trust by paying real returns, enhancing their credibility before eventually scamming investors.
A Global Scam with Deep Roots
It’s important to note that this type of scam is not unique to Egypt. It’s a global phenomenon with deep historical roots. Charles Ponzi (1882–1949) is credited with inventing this type of fraud in the 1920s, promising investors huge returns through international postal reply coupons.
Ponzi’s scheme relied on attracting investors with promises of large, guaranteed returns in a short period. The scam works by using funds from new investors to pay “returns” to earlier investors, rather than generating real profits from actual investments.
Ponzi schemes, like modern scams, are doomed to collapse because they don’t rely on any real business or investment activity. Once the flow of new money slows down, the scheme collapses, and most participants lose their money.
How Can We Protect Ourselves?
The first step in verifying the legitimacy of any platform is to ensure it operates within the law. Any investment platform must have the necessary licenses from regulatory authorities, such as the Financial Regulatory Authority (FRA). In such cases, the state acts as a guarantor and protector of investors’ funds.
It’s also undeniable that a large segment of Egyptians lacks financial literacy. Experts should take the initiative to enhance public knowledge of investment basics and associated risks, and to steer people away from offers that seem “too good to be true.”
Before taking any investment decision, it’s advisable to consult certified financial experts and exercise caution when considering putting money into any project. Offers that require small initial amounts with promises of huge returns are often traps to lure victims.
The media plays a crucial role in raising awareness about modern scams and warning citizens of potential risks. Laws and penalties must also adapt quickly to address financial fraud and provide easy mechanisms for reporting suspicious activities.
As technology evolves and the internet becomes more pervasive, scams grow more sophisticated. This requires all of us to remain vigilant and cautious. Protecting our money and financial future starts with awareness and knowledge. We must not let ambition blind us to reality.
In light of this, we might ask: How can educational institutions play a greater role in promoting financial literacy among youth? And what steps can authorities take to develop more effective regulatory mechanisms in the digital age?
Reflecting on these questions and working toward answers will undoubtedly help build a more aware and resilient society, better equipped to face such innovative scams.
