So, are Autosurfs ponzis?

I am inclined to agree, judging by the number of failed autosurfs in the last year or so. But, it would be foolish to lump all of them together. It's like someone saying that all Germans are evil (because of the two World Wars), which is a generalisation that has no bearing at all.

The problem with autosurfs, is that they operate outside the norms of government control. This difficult in regulation makes them prime suspects in every conceivable sort of criminal activity: money launder, tax evasion, ponzi schemes, and that's just the tip of the iceberg.

Now, some autosurfs seek to differentiate themselves, in saying that they have a maximum membership quota, e.g. 100,000 members, after which, the site goes private. Now, a ponzi scheme requires the influx of new members. That's how ponzis work. New money to pay the early birds. If the autosurf is sustainable without the influx of new members, would that clear the site from guilt? We have yet to see an autosurf prove their long-term sustainability without a shadow of a doubt. However, the industry is still in its infancy, so it could still be too early to tell.

I've been following the 12DailyPro/StormPay/Autosurf fiasco for the last couple of weeks, and it's messy. All parties claim innocence, flinging accusations against each other (in an effort to divert blame, no doubt). There is some element of truth in the claims and allegations (No smoke without fire). I am of the view that everyone involved bears some of the blame.

I would like to refer to the case of the original ponzi. Thousands of investors lost money in the scheme, while a few made money. Now, when the scheme was still going strong, people were throwing money at Ponzi. Ponzi used the money, and bought a 38% stake in Hanover Trust Company, in which a large portion of the invested funds were deposited (at 5% annual rate of interest). Now, later investigations would prove that the bank KNEW about Ponzi's dealings and that it WAS a scam. However, the bank sought to maintain this business relationship (due to the large inflow of money that could then be loaned out). The bank collapsed in the aftermath of the ponzi scheme, along with a few others (where Ponzi had also deposited funds), as Ponzi's deposits were confiscated to repay the investors.

Now, if we compare this to the current situation, we can draw some obvious comparisons. Stormpay ('bank') acts as a store of funds. Autosurf company (alleged 'Ponzi') generates inflow of funds to Stormpay, which Stormpay is glad to receive, thanks to their (high) transaction fees. For Stormpay, the more transactions the better.

It would take a fool to believe that Stormpay didn't know what was going on. They were just unwilling to let go of such a lucrative cash cow. IF autosurfs are ponzis, Stormpay is liable as well, not for failing to identify the true nature of its clients, but rather, for turning a blind eye to a situation as long as the money continued to flow.


Related links:
So is Autosurfing Legitimate?
http://www.mark-knutson.com/thescheme.html


Stormpay, 12DailyPro, Autosurfs and other controversies. Articles in chronological order.
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