Doesn’t the public market and IPO process exist explicitly to weed out obviously bad faith “businesses” like the ones you describe, or at least force them to be

Doesn’t the public market and IPO process exist explicitly to weed out obviously bad faith “businesses” like the ones you describe, or at least force them to be transparent enough about what they’re doing that no one gets hoodwinked? There are marketplaces where you can buy and sell shares in stuff like the second scenario you describe — that’s essentially a debt consolidation loan, and you can fund one in whole or part at lendingclub.com — but the SEC only allows “qualified investors” to participate. You have to demonstrate that you can easily survive losing your full investment, and there’s no similar requirement for buying publicly traded stocks.