The same thing would happen in the world of Kickstarter - big asset bubbles and rampant speculation, bogus funding campaigns, graft, and exploitation.
I see. So what do you call a roulette table with obviously addicted gamblers throwing their money away, then? Good old American fun?
Problem gamblers must self-exclude and the casinos then must do their best to adhere to these lists that the Nevada Gaming Commission sends out. (And casinos are very good, if not infallible, at doing this.) But the person must exclude his/herself.
I knew it was a scam from the day I learned of it, just based on this guy's character and inexperience.
I can assure you that equity would be no different, unless the investments could be protected by law in some way. I don't really know how to prevent this sort of thing, investors needs to do their homework, but even that's not always accurate.