Stock Generation
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Stock Generation was a website that ran from 1998 to early 2000 and is now part of Internet lore as the longest-running, most infamous Ponzi scheme in the history of the Internet. Stock Generation allowed people to trade virtual companies using real money and promised enormous returns on investment. Located on an off-shore island in the Caribbean, the U.S. Securities and Exchange Commission was unable to cite Stock Generation's founders and owners (members of the Russian conglomerate MMM) for securities violations. Finally, in 2000, the market crashed, which caused losses of at least $5.5 million to hundreds of participants. The SEC then sued in the U.S. District Court for the District of Massachusetts, alleging that the "virtual stock exchange" was in effect a Ponzi scheme. The court ruled in favor of Stock Generation, stating that the site adequately described the market as "a game" not an investment vehicle. The United States Court of Appeals for the First Circuit later reversed the District Court, and the game was shut down.
