Wikipedia's definition is a bit problematic because it doesn't explain why it is fraudulent, and leaves out the precise elements that make it fraudulent. Namely

Wikipedia's definition is a bit problematic because it doesn't explain why it is fraudulent, and leaves out the precise elements that make it fraudulent. Namely: promising a non-existent return and the ability to refund, and secretly doing so by refunding (as a central party) old members. Note that Wikipedia later in the article does clarify some of these points. To quote: - In a Ponzi scheme, the schemer acts as a "hub" for the victims, interacting with all of them directly. In a pyramid scheme, those who recruit additional participants benefit directly. (In fact, failure to recruit typically means no investment return.) - A Ponzi scheme claims to rely on some esoteric investment approach and often attracts well-to-do investors; whereas pyramid schemes explicitly claim that new money will be the source of payout for the initial investments. In the case of Groupon founders cashing out, that was even publicly announced, and quite certainly not fraudulent in itself.