If you have been connected to the Internet in the last year, it is very likely that within your network of contacts on Facebook and WhatsApp you have come across a member of the controversial Trust Investing “crypto asset investment platform.”
Under the slogan “In Trust I trust,” digital finance enthusiasts seek to multiply profits and add their acquaintances to what seems to be a solution—almost magical—to achieve financial freedom: the promise of more than 200% return on the initial investment in 10 months.
In Cuba, with an economy increasingly affected and aggravated by the COVID-19 pandemic, the promise of generating passive income seduces thousands of people, who have joined Trust Investing. Several experts have described the scheme as a Ponzi scam, alluding to the famous case of Carlos Ponzi in the United States, who paid his initial investors with the money of the new investors. A system that is mathematically doomed to failure once people run out of the pyramid.
Although there are no official figures, the “trusters” themselves, as the members of this community call themselves, calculate in their groups in the digital media that more than 70,000 people in Cuba are linked to this informal business system that has no regulations, and whose legal implications are a gray area on the island.
Meanwhile, earlier this week it was announced that Ruslan Concepción, director and principal promoter of Trust Investing in Cuba, was detained at the Havana airport when he was preparing to travel to Russia, after border agents considered that the money he was traveling with did not come from a legal source.
But is Trust Investing really a Ponzi scheme? If it were a scam, why do its members continue to generate profits and more and more followers join the pyramid? How does everything really work?
With the aim of investigating more about an extremely delicate topic that arouses so many passions, OnCuba spoke with experts in Economics and Social Sciences, and we compiled a series of documents and official sources on international trading that serve as a starting point to begin to understand the ABC of Trust Investing in Cuba.
What is Trust Investing?
Some call it a “fraternity” of people who trust and bet on a company of dubious provenance and who often do not allow criticism or skeptical thinking about its budgets.
On its website, Trust Investing describes itself as a “crypto asset management company in the most daring markets” that has “a high liquidity index” and offers its clients and partners “the opportunity to be an integral part of this innovative market.”
However, various verifications at our fingertips generate, to say the least, doubts.
Tenemos una gran audiencia en América Latina: tengan cuidado con una 'empresa' que se está convirtiendo en un ponzi gigante – Trustinvesting … ¡es una estafa! ¡Mantente alejado! pic.twitter.com/uPPW5qqbWo
— Stacy Herbert (@stacyherbert) April 25, 2021
For starters, the official business address ranges from Panama to Estonia, but physical locations don’t exist outside the virtual world. In addition, they claim to be associated with BDL Bank, we weren’t able to verify the existence of such a bank, and the address attributed to it belongs to a hotel.
The Panamanian government itself publicly warned in June 2020 that Trust Investing was not authorized to operate in the stock market or provide investment services, something the company claims to do with investors’ money.
In Spain, it is not authorized to offer financial services either, despite the fact that its founders are Spanish, according to the National Securities Market Commission.
But then, where does the money come from with which investors’ profits are paid? The answer seems to indicate that it comes from the new investors, as would happen in a classic Ponzi scheme; this is confirmed by the Tulip Research fraudulent activity analysis firm.
How to discover it?
They promise benefits way above the market average
The company has very few documents on its services
The company is not registered or controlled by a trustworthy regulator
Its principal target are investors who have little financial knowledge
There will always exist an investor who is going to easily collect what was promised, to generate trust
Without having clear company addresses or documents that prove what they do, some of the company executives mention in videos circulating on social networks that, in addition to trading with cryptocurrencies, they operate an emerald mine in Brazil and have investments in an alleged renewable energy company.
Trust Investing is also a “company” whose founder and director, Diego Chaves, has been involved in at least five legal proceedings, some of them from the financial world, according to the Brokeronline portal.
Juan Alejandro Triana, professor at the Center for Economic Studies at the University of Havana, confirms that when we talk about Trust Investing operations, there is no doubt that we are facing a Ponzi scheme:
“In a few years it will be discovered that it is a financial scam. What’s going on? The people who have created it have been quite intelligent, which is why it is in good health to date. This is not the same as the first pyramid schemes that Carlos Ponzi created at the beginning of the 20th century to scam people, but it has been optimized along with the vertiginous development of the financial market and financial engineering in the world,” explained Triana.
So why do people keep logging in if it could be considered a scam?
“This investment fund is driven by a system of very intelligent rules that forces people to reinvest, that is, to buy another investment package,” Triana explained to OnCuba. “Because if you keep investing in the same initial package, the monthly returns will decrease. That is, for a third investment of $100, [the person] would pay 19, 18 percent. All this has as a result that people have done very well, they decide to invest more and do better networking.”
Triana estimates that in Cuba there are between 60,000 and 70,000 people who are already investing in Trust Investing. Much higher numbers of Cubans involved in this system have been handled in social media groups.
“As they add new referrals and invest more money, Trust Investing pays them a premium for leveling up. If you invest more, they place you at a higher level as a “team leader,” “manager” and for those categories they make you monthly payments of certain amounts,” explained Triana.
Investment distribution in Trust Investing
What do they do with the money?
A person invests, for example, 100 dollars in bitcoin (which becomes a USD internal balance)
40% goes to Trust Investing
10% to the person who provided the reference
50% for marketing
This means that, according to the promise made to double the initial money in 10 months, Trust Investing would turn the equivalent into cryptocurrencies of 50 dollars into 200. An incredible +300% return. The average of another fund dedicated to cryptocurrencies called Crypto Hedge Fund, for example, was only +30% in 2020.
Source: Fabiano Lima. Manuel Milanés Youtube channel
The problem that prevents seeing clearly the implicit scam in the Ponzi schemes is that at the beginning they always pay, they “work” with the money that comes in from new contributors, until one day, overnight, the fresh injection of capital runs out and the company and the money disappear. In this case, anyone who has investments still in it is harmed and, since no one knows when this can happen, a large number of people can potentially be affected.
Do I trust Trust?
In other countries, such as Turkey, several similar companies have collapsed and fled with billions of dollars in cryptocurrencies, such as Vebitcoin and Thodex.
Trust Investing has not been the first nor the only company related to cryptocurrencies and pyramid scams that have reached Cubans, inside and outside Cuba. Names like Arbistar and Nimbus have also claimed some “victims” on the island.
Even non-digital scams that have proliferated in times of pandemic have been denounced by the official Cuban press, as is the case of the so-called “Bola.”
Meanwhile, the discussions on the networks about these issues tend to be extremely polarized, as the trusters see the positive result that their investment has so far had, and they show complete trust in their “leaders” and energetically—frequently aggressively—express themselves against opponents of the source of their earnings.
This is what happened to the Cuban entrepreneur and influencer Erich García, creator of the Bache Cubano YouTube channel and one of the first to publicly expose the pyramid scam.
Bro, thanks for the tolerance. TI was the first, actually they are ALL the same.
But when I made the Trust videos and saw what it involved…I gave up.
Invest in whatever you want…I don’t care bro. It’s your money, it’s your consequences.
I don’t invest in any.
— Erich J. García Cruz 🚀 (@ErichGarciaCruz) April 28, 2021
Although very little has been published and studied on this phenomenon from the sociological point of view in Cuba, Adalberto Hernández Santos, Master in Education in the United Kingdom and Specialist in Digital Literacy, explained to OnCuba that this phenomenon is booming “at a time when we have two preconditions in Cuba: the increase in Internet access in the population and that the minimum investment is barely 15 dollars.”
“All this comes in the context of the pandemic, where uncertainty has increased, where tourism and sources of work have decreased. People saw TI then as a promise to be able to invest and obtain a certain benefit in a very short term, without doing anything,” says Hernández.
The success stories also began to spread more quickly, he explains, something that is typical of this system to continue attracting more people.
For Hernández, we are in the face of easy money, “from home, sitting down, with the promise of growth and profits,” that no business in the world has. Something that is not exclusive to Cuba.
Hernández recognizes in Trust Investing parameters of other Ponzi or pyramid schemes, such as Herbalife and Amway, “but at least in the latter two you have products that ‘justify’ the expenses and the investment issue, but in Trust Investing there isn’t even a product.”
Many of these Ponzi schemes are used to circulate money from drug trafficking and international terrorism, while people use their own social and family networks to create investor networks. “You don’t log into anything until you establish an investment line,” Hernández sentences.
However, some “trusters” contradict this statement by saying that they do not have networks under them and still continue to win. The answer to that lies in Trust Investing’s capped earnings rules, in which networks that someone else builds can contribute to that artificial “profit” that someone else gets without networks.
“Right now the Ponzi scheme for growth in Cuba is very large, because there is very little digital and financial literacy. Very few critically evaluate or discern when information is true and where it comes from,” says Hernández.
The way to attract new investors, in this case for Trust Investing, is not based on personal charisma to sell, but on the strength of affective relationships, on attracting people who trust the person in question.
“I have had fights with friends, just for having doubts about the company. I tell them to find out if these people really have vineyards, to look for the address they say they have in Spain, but they don’t. Having a critical vision and knowing how to compare the information is essential so that people do not fall for this type of scam,” says Hernández.
It is speculated that the “company” should stop promoting itself in 2024, date on which, according to its directors, they will go back to being “private,” without offering convincing reasons for this decision. Meanwhile, people aware or unaware of the scam continue to invest and attract more people to the company, with the justification of “making money while it works.”
“The issue is that it will be necessary to see what regulations in Cuba could criminalize scams in the digital context, because until now there has not been something like this,” continues the specialist.
“When the scam appears, many fractures will occur in family and social relationships, in circles of friends, in the workplace. There’s going to be a major disappointment, because people are investing based on people they trust, thinking they wouldn’t let them down,” says Hernández.
“Either way,” he continues, “assuming Trust Investing falls tomorrow, other similar companies are going to emerge. The company is just one example, one of the most widespread, but there are many other forms of scam, which are growing faster and faster in a little regulated and parallel market such as the one that develops on the Internet.”
OnCuba will delve into this topic