NASSAU, BAHAMAS — Engaging in or promoting unlicensed financial schemes such as Ponzi or pyramid schemes is no longer just a bad investment—it’s a crime that could expose individuals to criminal liability and fines of up to $100,000, according to officials at the Securities Commission of The Bahamas (SCB).
Gawaine Ward, Senior Manager of Enforcement at the SCB, emphasized that the Commission now has enhanced powers to address such schemes under the Financial and Corporate Services Providers Act of 2020. This law allows the Commission to take action against what it defines as “financial schemes,” which encompass a wide range of illegal programs—particularly those that exhibit hallmark characteristics of Ponzi or pyramid schemes.
“Ponzi schemes, for example, now fall under financial schemes, and these are unlawful activities. They are not programs that can be licensed or regulated. They are unlawful by their very nature,” Ward explained to Eyewitness News. “A Ponzi scheme, to use a Bahamian phrase, is essentially about taking from Peter to pay Paul.”
Ward highlighted that Ponzi schemes typically involve a small group of investors, often wealthy individuals, who contribute the bulk of the funds. This differs from pyramid schemes, which recruit participants at various levels, each encouraging others to join, creating a “pyramid” structure. Eventually, the pyramid collapses when it becomes impossible to recruit enough people to sustain the returns.
“The key difference is that a Ponzi scheme can survive for a long time, especially if one or two individuals are contributing significant amounts of money,” Ward said. “On the other hand, pyramid schemes have a much shorter lifespan because of the way they rely on a constant influx of new participants. Eventually, it just becomes unsustainable.”
Before the introduction of the Financial and Corporate Service Providers Act, the Commission did not have the legal tools to tackle these types of schemes effectively. However, the Act now enables authorities to take serious action against anyone involved in launching, promoting, or participating in financial schemes.
“Under the new law, anyone who launches, promotes, markets, or recruits participants into a financial scheme is committing an offence. The penalty for such offences can include fines of up to $100,000,” Ward confirmed. “The law gives us the authority to target these operations, and we’re making it clear that individuals need to be aware of the risks—both financial and criminal—associated with getting involved in these schemes.”
Ward stressed the importance of public awareness. “It’s not just about losing money; it’s about criminal liability. People need to understand that getting involved in such schemes could lead to criminal prosecution. The financial harm is significant, but the legal consequences could be even worse.”
The warning from the SCB comes amid growing concern about Creators Alliance, a platform that markets itself as a content creation service. The platform has recently been under investigation for allegedly operating as a pyramid scheme. According to the Securities Commission’s recent notice, Creators Alliance may be operating unlawfully within The Bahamas, and its business practices bear the hallmarks of a pyramid scheme.
“The Commission has become aware that Creators Alliance may be conducting activities in or from The Bahamas that are either registrable or illegal under one or more of our Acts,” the SCB notice stated. “We hereby advise the public that Creators Alliance and its agents are not registered with or licensed by the Commission. Furthermore, their activities may violate one or more of the relevant laws.”
Creators Alliance operates by recruiting individuals into a multi-tiered structure, where participants are asked to invest in cryptocurrency or Tether in exchange for promised returns from watching promotional videos. According to Ward, this type of structure raises significant concerns.
“Creators Alliance is a perfect example of a pyramid scheme. The way they operate is fundamentally unsustainable,” Ward said. “Participants are promised returns based on the size of their recruitment network. The promise of guaranteed returns—especially in a system like this—is a major red flag.”
Participants in Creators Alliance are required to pay an upfront fee, which the platform claims will be returned after a specific investment period. However, Ward noted that there is little evidence that participants in similar schemes have been able to recover their money once these operations collapse.
“Unfortunately, the reality is that most people who participate in these schemes will never see their money again,” he warned. “You may be able to take civil action, but the likelihood of recovery is slim. That’s why the Commission has taken the step to criminalize this behavior. We want to send a strong message that these operations will not be tolerated in The Bahamas.”
Ward also noted that while there was a surge in Ponzi and pyramid schemes during the COVID-19 pandemic, there has since been a noticeable rise in scams related to cryptocurrency and Forex trading.
“We saw a sharp increase in fraudulent schemes during the pandemic, particularly involving Forex trading,” Ward explained. “Now, we’re seeing more schemes based around cryptocurrency, which is concerning.
The SCB’s warning about Creators Alliance comes after several reports that users of the platform have stopped receiving payouts. This has prompted further investigation, with reports of similar issues in St. Lucia and Puerto Rico, where operations under the same name have also ceased payments. The Royal Bahamas Police Force is now investigating the platform for potential fraud.
In response to the growing scrutiny, Creators Alliance manager Shiro Hing attempted to reassure users by stating that the platform had transitioned to a new system to improve security and efficiency. However, Ward remains cautious about the platform’s legitimacy.
“This is a classic case of a scheme that promises the world but ultimately leads to financial ruin for most involved,” Ward said. “We are continuing to monitor the situation closely, and we urge Bahamians to be vigilant. If it seems too good to be true, it probably is.”
