{"id":10406,"date":"2023-05-10T10:00:13","date_gmt":"2023-05-10T04:30:13","guid":{"rendered":"https:\/\/gtm360.com\/blog\/?p=10406"},"modified":"2025-06-30T22:08:08","modified_gmt":"2025-06-30T16:38:08","slug":"8-money-making-schemes-that-sound-too-good-to-be-true-but-are-true","status":"publish","type":"post","link":"https:\/\/gtm360.com\/blog\/2023\/05\/10\/8-money-making-schemes-that-sound-too-good-to-be-true-but-are-true\/","title":{"rendered":"8 Money-Making Schemes That Sound Too Good To Be True &#8211; But Are True"},"content":{"rendered":"<p><a href=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2023\/01\/cryptocurrency-coins-fi.jpg\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-10582 size-medium\" src=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2023\/01\/cryptocurrency-coins-fi-200x112.jpg\" alt=\"\" width=\"200\" height=\"112\" srcset=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2023\/01\/cryptocurrency-coins-fi-200x112.jpg 200w, https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2023\/01\/cryptocurrency-coins-fi.jpg 630w\" sizes=\"auto, (max-width: 200px) 100vw, 200px\" \/><\/a>According to the old adage, &#8220;If it&#8217;s too good to be true, it&#8217;s a scam&#8221;.<\/p>\n<p>In times of rampant fraud, like we&#8217;re seeing in the crypto world now, many people are repeating this warning. Take the <a href=\"https:\/\/www.linkedin.com\/posts\/better_it-is-not-what-it-looks-like-over-the-activity-7000688495337848832-ezGP?utm_source=share&amp;utm_medium=member_desktop\" target=\"_blank\" rel=\"noopener\"><strong>OP of this LinkedIn Post<\/strong><\/a> for example.<\/p>\n<p>I&#8217;m sure they&#8217;re all well-meaning.<\/p>\n<p>I&#8217;m also sure that their warning is valid most of the times.<\/p>\n<p>But what about the rest of the times?<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Glad you made the &quot;not always&quot; caveat &#8211; because some of the biggest fortunes were founded on &quot;too good to be true&quot; deals that did prove very good.<\/p>\n<p>&mdash; SKR (@s_ketharaman) <a href=\"https:\/\/twitter.com\/s_ketharaman\/status\/1609845616867422210?ref_src=twsrc%5Etfw\">January 2, 2023<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Many fortunes have been made on the back of money-making schemes that seemed questionable at the time but worked out well in the end.<\/p>\n<p>In this post, I&#8217;ll share eight examples of such schemes:<\/p>\n<ol>\n<li>Dhirubhai Ambani Nylon Arbitrage<\/li>\n<li>Sam Bankman-Fried Khimchi Premium<\/li>\n<li>Sachin Bansal and Binny Bansal Flipkart Sale<\/li>\n<li>Bernie Madoff Ponzi Scheme<\/li>\n<li>Zerodha Revenue<\/li>\n<li>Kunal Shah Startups<\/li>\n<li>eBay Bonanza<\/li>\n<li>Fractional Reserve Banking<\/li>\n<\/ol>\n<p>Let&#8217;s get on with it.<\/p>\n<p><strong>1. Dhirubhai Ambani Nylon Arbitrage<\/strong><\/p>\n<p>Nylon arbitrage is reported to be the source of the first fortune of <em>Reliance<\/em> <em>Industries<\/em>, <a href=\"https:\/\/gtm360.com\/blog\/2022\/08\/09\/fortune-global-500-so-near-yet-so-far\/\" target=\"_blank\" rel=\"noopener\">FORTUNE GLOBAL 104<\/a> corporation and the second largest company in India, with FY2022 revenues of $94 billion.<br \/>\n<!--BLOCKQUOTE, NO LHS LINE, GREEN--><\/p>\n<blockquote class=\"skr-bq-noline\">\n<div style=\"background-color: #00c89640; padding: 15px 30px;\">To make manufacturers self-sufficient, the Indian government allowed them to import raw materials only in proportion to the goods they exported. Ambani persuaded the government to let him import polyester filament yarn in proportion to the nylon goods he exported. Nylon was available cheaply in India, polyester filament was 600% more expensive when locally sourced in India than its cost when imported. So Ambani set up a closed loop: make nylon clothes from locally-sourced materials; sell them abroad; use the import quota to import polyester filament; sell it at home.\u00a0&#8211; <a href=\"https:\/\/www.thediff.co\/archive\/to-understand-jio-you-need-to-understand\/\" target=\"_blank\" rel=\"noopener\"><em>The Diff<\/em><\/a> by Byrne Hobart<\/div>\n<\/blockquote>\n<p><strong>2. Sam Bankman-Fried Khimchi Premium<\/strong><\/p>\n<p>Sam Bankman-Fried, the founder of <em>FTX<\/em>, raised nearly a billion dollars in seed capital for his now-bankrupt cryptoexchange by using the so-called <em>Bitcoin Khimchi Arbitrage<\/em>.<\/p>\n<p><!--BLOCKQUOTE, NO LHS LINE, GREEN--><\/p>\n<blockquote class=\"skr-bq-noline\">\n<div style=\"background-color: #00c89640; padding: 15px 30px;\"><a href=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2023\/01\/sbf-khimchi-sequoia-fisher.jpg\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-10578 size-medium\" src=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2023\/01\/sbf-khimchi-sequoia-fisher-182x200.jpg\" alt=\"\" width=\"182\" height=\"200\" srcset=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2023\/01\/sbf-khimchi-sequoia-fisher-182x200.jpg 182w, https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2023\/01\/sbf-khimchi-sequoia-fisher.jpg 465w\" sizes=\"auto, (max-width: 182px) 100vw, 182px\" \/><\/a>SBF noticed that Bitcoin was trading at $10,000 in USA and $15,000 in Japan \/ Korea. This was too good to be true &#8211; one simply buys Bitcoin at the lower price, sells it at the higher price, and pockets the 50% difference. Instead of dismissing it, SBF decided to create some accounts on different exchanges to do a proof of concept. It worked! And yielded a $20 profit. SBF immediately plonked down $50,000 of his own money to work. &#8211; Adapted from <a href=\"https:\/\/s3.eu-central-1.wasabisys.com\/cache.raindrop.io\/470\/636\/128\/file?X-Amz-Algorithm=AWS4-HMAC-SHA256&amp;X-Amz-Credential=BE6X466RAMMR6TB09V4G%2F20230107%2Feu-central-1%2Fs3%2Faws4_request&amp;X-Amz-Date=20230107T142158Z&amp;X-Amz-Expires=1800&amp;X-Amz-Signature=df573b3a05d3e0fa6df21d4d946fdda233d54d39890b92efed8e8ed6c30b23dc&amp;X-Amz-SignedHeaders=host\" target=\"_blank\" rel=\"noopener\"><strong><em>Sam Bankman-Fried Has A Savior Complex &#8211; And Maybe You Should Too<\/em><\/strong><\/a> by Adam Fisher*.<\/div>\n<\/blockquote>\n<p>The rest is history.<\/p>\n<p>SBF effectively exploited the &#8220;too good to be true &#8211; but true&#8221; delta between the price of Bitcoin in USA and Asia to make a billion dollars in profit in a few weeks. (If you do the math, $50,000 compounding at 50% per day will result in one billion dollars in 24 trading days.)<\/p>\n<p><strong>3. Sachin Bansal and Binny Bansal Flipkart Sale<\/strong><\/p>\n<p>If somone came around and told you, &#8220;Hey, take this money to start a company and become a billionaire in 10 years without making profits&#8221;, most of you will throw them out as a conman.<\/p>\n<p>Sachin Bansal and Binny Bansal did not.<\/p>\n<p>Instead, they founded <em>Flipkart<\/em> and rode the <a href=\"https:\/\/gtm360.com\/blog\/2018\/11\/16\/teardown-of-the-vc-investment-playbook\/\" target=\"_blank\" rel=\"noopener\"><em>VC Investment Playbook<\/em><\/a>\u00a0to blockbuster success for Flipkart and themselves.\u00a0More at <a href=\"https:\/\/gtm360.com\/blog\/2020\/12\/09\/how-do-founders-become-rich-when-their-startups-dont-make-profits\/\" target=\"_blank\" rel=\"noopener\"><strong>How Do Founders Become Rich When Their Startups Don\u2019t Make Profits?<\/strong><\/a>.<\/p>\n<p>(For the uninitiated, India&#8217;s largest ecommerce company Flipkart was founded in 2007 and sold out to <em>Walmart<\/em> for $22 billion dollars in 2017. The two co-founders cashed out with a billion dollars apiece. The company never made profits and still makes losses. At $549M, it&#8217;s the <a href=\"https:\/\/growthbug.com\/indias-100-unicorns-ranked-by-revenue-losses-current-valuation-revenue-multiple-5c2c92ae0b38\" target=\"_blank\" rel=\"noopener\">highest loss-making &#8220;startup&#8221; in India<\/a>.)<\/p>\n<p><strong>4. Bernie Madoff Ponzi Scheme<\/strong><\/p>\n<p>The first one-third of investors in Ponzi Schemes typically receive the promised outsized returns, however &#8220;too good to be true&#8221; they are.<\/p>\n<p>(According to studies, the second one-third gets its capital back, only the last third loses its shirt.).<\/p>\n<p><strong>5. Zerodha Revenue<\/strong><\/p>\n<p><em>Zerodha<\/em>, the Robinhood of India, pioneered free stock trading. On the back of its disruptive brokerage model, it overtook <em>ICICIdirect<\/em>, <em>HDFC Securities<\/em> and all other incumbent full service eBrokerages to become the market leader.<\/p>\n<p>When I recently read that Zerodha made revenue of INR 4,300 crores ($518 million), I almost jumped off the seat.<\/p>\n<p>For a free app, this sounded too high. I was then told that, while Zerodha gives cash trades for free, it charges 0.03% for F&amp;O trades (subject to a maximum of \u20b920 per trade).<\/p>\n<p>I then did the following back-of-the-envelope math.<\/p>\n<p><!--BLOCKQUOTE, NO LHS LINE, GRAY--><\/p>\n<blockquote class=\"skr-bq-noline\">\n<div style=\"background-color: #00c89640; padding: 15px 30px;\">&#8211; Revenue: \u20b94300 crores<br \/>\n&#8211; Users: 6.2 million<br \/>\n&#8211; Average Revenue per User (ARPU): \u20b97K\/user\/year<br \/>\n&#8211; Brokerage: 0% on Cash, 0.03% on F&amp;O (max \u20b920)<br \/>\n&#8211; If 100% users do F&amp;O, F&amp;O trading volume = \u20b92.3CR\/user\/year.<\/div>\n<\/blockquote>\n<p>I thought this figure was too high. Especially when I learned that many Zerodha users don&#8217;t do any F&amp;O.<\/p>\n<p><!--BLOCKQUOTE, NO LHS LINE, GRAY--><\/p>\n<blockquote class=\"skr-bq-noline\">\n<div style=\"background-color: #fafafa; padding: 15px 30px;\"><a href=\"https:\/\/twitter.com\/gopibella\/status\/1528677542546137089\" target=\"_blank\" rel=\"noopener\">@gopibella:<\/a> Why do you assume 100% users do F&amp;O? 3 members of my family + self have Zerodha accounts. None of use F&amp;O.<\/div>\n<\/blockquote>\n<p>Nonetheless, the revenue figure is widely reported by the media. So, however much it sounds too good to be true, it must be true.<\/p>\n<p><strong>6. Kunal Shah Startups<\/strong><\/p>\n<p><a href=\"https:\/\/twitter.com\/kunalb11\" target=\"_blank\" rel=\"noopener\"><strong>Kunal Shah<\/strong><\/a> is the Founder of <em>CRED<\/em>, a unicorn startup that gives rewards for paying a credit card bill. Yes, that&#8217;s right, credit card bill. This is over and above the reward points given by the credit card company for making purchases on the credit card. This would sound too good to be true to anyone who even has an iota of understanding about credit cards work, as I highlighted in <a href=\"https:\/\/gtm360.com\/blog\/2021\/04\/28\/incredible-rise-of-cred\/\" target=\"_blank\" rel=\"noopener\"><strong>InCREDible Rise Of CRED<\/strong><\/a> but it is true.<\/p>\n<p>Kunal Shah&#8217;s previous startup gave coupons worth the full amount of what was topped up by prepaid mobile phone users and was appropriately called <em>FreeCharge<\/em>. If that sounds even more incredible, it is, but not only for its users &#8211; Shah exited by selling the startup for $400 million.<\/p>\n<p><strong>7. eBay Bonanza<\/strong><\/p>\n<p>You place an order for coffee pods for $20 on a random seller on eBay and pay with your credit card. Two days later, you receive the coffee pods <strong><em>and<\/em> <\/strong>a coffeemaker machine worth $200 along with a note that says &#8220;enjoy the free gift&#8221;. The package also contains an invoice from <em>Nespresso <\/em>for $220 with your name on it. You check your credit card online, it shows only your $20 charge to eBay seller and nothing to Nespresso.<\/p>\n<p>If this happens to you, enjoy the bonanza! There&#8217;s no catch.<\/p>\n<p>According to <em>NPR<\/em>, you&#8217;re the beneficiary of the so-called <strong>triangulation fraud<\/strong>\u00a0used by carders. As explained in its podcast titled <a href=\"https:\/\/www.npr.org\/2022\/08\/26\/1119606931\/wake-up-and-smell-the-fraud\" target=\"_blank\" rel=\"noopener\"><strong>Wake up and smell the fraud<\/strong><\/a>, the eBay seller pockets your $20 and uses stolen credit card details (available on the dark web for $5) to place an order for the coffee pods <em>and<\/em> coffeemaker machine on Nespresso website for $220 (but effectively at zero cost to him since the card is stolen) and enters your name and address for delivery. He gifts you the coffeemaker with the expectation that, like the vast majority of people who won&#8217;t look a gift horse in the mouth, you&#8217;d be delighted with the freebie and leave a good review for him on the site, thus helping him to continue to perpetuate this fraud.<\/p>\n<p>I encourage you to listen to the podcast to understand who the real victim is (Spoiler alert: It&#8217;s not you).<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Common man never gets tradeoffs, no wonder <a href=\"https:\/\/twitter.com\/patio11?ref_src=twsrc%5Etfw\">@patio11<\/a> &#39;s line &quot;the optimal amount of (payment) fraud is greater than zero&quot; was cut out from the podcast targeted at J6P. <a href=\"https:\/\/t.co\/t5sj1OIFJx\">https:\/\/t.co\/t5sj1OIFJx<\/a>.<\/p>\n<p>&mdash; SKR (@s_ketharaman) <a href=\"https:\/\/twitter.com\/s_ketharaman\/status\/1728712782953009368?ref_src=twsrc%5Etfw\">November 26, 2023<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>While you didn&#8217;t seek out this money making scheme, it sought you out and enriched you.<\/p>\n<p><strong>8. Fractional Reserve Banking<\/strong><\/p>\n<figure id=\"attachment_13559\" aria-describedby=\"caption-attachment-13559\" style=\"width: 240px\" class=\"wp-caption alignright\"><a href=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2023\/05\/BANK-RUN-UNSTABLE-EQUILLIBRIUM-CONFIDENCE-TRICK-MONEY-STUFF-18MAR2023.jpg\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-13559\" src=\"https:\/\/gtm360.com\/blog\/wp-content\/uploads\/2023\/05\/BANK-RUN-UNSTABLE-EQUILLIBRIUM-CONFIDENCE-TRICK-MONEY-STUFF-18MAR2023.jpg\" alt=\"\" width=\"250\" height=\"225\" \/><\/a><figcaption id=\"caption-attachment-13559\" class=\"wp-caption-text\">CLICK TO ENLARGE<\/figcaption><\/figure>\n<p>Suppose somebody came to you and said, &#8220;Hand over your money to me, I&#8217;ll lend it to companies for several years, but I&#8217;ll return your money whenever you ask for it&#8221;.<\/p>\n<p>I&#8217;m sure you&#8217;ll find it shady. After all, how can someone return your money on demand when they can&#8217;t collect on their loans on demand?<\/p>\n<p>But banks do!<\/p>\n<p>The so-called <em>fractional reserve banking<\/em> model works because not all depositors line up in front of banks at the same time to demand their money. If they do, <strong><em>no bank on the planet will survive<\/em><\/strong>. Matt Levine calls this &#8220;confidence trick&#8221;.<\/p>\n<p>Besides this fundamental consumer behavior trait, the fractional reserve banking model is backstopped by regulations around capital requirements, deposit insurance, and central bank as the lender of last resort.<\/p>\n<hr style=\"width: 70%;\" \/>\n<p>I&#8217;m sure some of you will pushback against the above examples and say that such money making schemes are very rare.<\/p>\n<p>I won&#8217;t disagree with you.<\/p>\n<p>But, wealth creation is equally rare.<\/p>\n<p>Known to be subject to\u00a0<em>Power Law Curve<\/em>, generational wealth is restricted to only 1-2% of the world&#8217;s population. So, even a 1% success rate for &#8220;too good to be true&#8221; money-making schemes is not bad odds.<\/p>\n<p><strong>DISCLAIMER:<\/strong> This is a report of past events. It is not investing or legal advice.<\/p>\n<p>*: <em>This article was published on Sequoia Capital website on 22 September 2022 and subsequently deleted when FTX filed for bankruptcy.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>According to the old adage, &#8220;If it&#8217;s too good to be true, it&#8217;s a scam&#8221;. In times of rampant fraud, like we&#8217;re seeing in the crypto world now, many people are repeating this warning. Take the OP of this LinkedIn Post for example. I&#8217;m sure they&#8217;re all well-meaning. I&#8217;m also sure that their warning is &#8230; <a title=\"8 Money-Making Schemes That Sound Too Good To Be True &#8211; But Are True\" class=\"read-more\" href=\"https:\/\/gtm360.com\/blog\/2023\/05\/10\/8-money-making-schemes-that-sound-too-good-to-be-true-but-are-true\/\" aria-label=\"Read more about 8 Money-Making Schemes That Sound Too Good To Be True &#8211; But Are True\">Read more<\/a><\/p>\n","protected":false},"author":4,"featured_media":10582,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,1,15],"tags":[],"class_list":["post-10406","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bfsi","category-mandatory-category","category-vc"],"_links":{"self":[{"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/posts\/10406","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/comments?post=10406"}],"version-history":[{"count":7,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/posts\/10406\/revisions"}],"predecessor-version":[{"id":13561,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/posts\/10406\/revisions\/13561"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/media\/10582"}],"wp:attachment":[{"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/media?parent=10406"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/categories?post=10406"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gtm360.com\/blog\/wp-json\/wp\/v2\/tags?post=10406"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}