In theory, the Ponzi-style business model is outlawed worldwide, including in Kenya. Yet, despite its prohibition, a regulatory void in our legal framework exists. As victims of these schemes grapple with the fallout, it becomes clear that the key to eradicating Ponzi schemes lies in a three-pronged approach: education, regulation, and enforcement.
Ponzi schemes and pyramid schemes, while distinct in their mechanics, share a common thread – exploiting participants for financial gain. Pyramid schemes focus on recruiting members, offering bonuses for new recruits, while Ponzi schemes demand investment, promising extraordinary and quick returns from subsequent investors. Both operate on the precarious precipice of legal ambiguity in Kenya due to the lack of specific regulations, leaving a breeding ground for financial predators.
