Finance is all about the thrill, and recently the Japanese stock market has experienced several circuit breakers, while the domestic bond market has seen a significant drop, capturing countless eyeballs. Unbeknownst to many, in another realm, following the collapse of Changshi Tea, another financial tea has also exploded.

On August 3rd, Pan Tea issued a restructuring announcement stating that the company would undergo debt or equity restructuring, with specific plans to be announced later. In this announcement, Pan Tea attributed the company's operational difficulties to various rumor attacks since 2024, which led to market instability and consequently restricted the use of a large amount of the company's funds.

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The announcement was quite formal, but investors did not buy into it. In their view, Pan Tea's move was essentially no different from an explosion.

Pan Tea, officially known as Pan Tea Holdings (Guangzhou) Co., Ltd., was established in 2021, but it positioned itself as a high-end Chinese tea brand. In just over two years, Pan Tea has developed into one of the top tea brands in Fangcun.

Fangcun is located at the junction of Guangzhou and Foshan, and it is the largest tea sales area in China, to some extent, representing the barometer of the tea market.

Pan Tea quickly made a name for itself locally, not only establishing cooperative tea garden bases in Yunnan and Fujian, but also owning over 500 physical stores nationwide, with almost a new store opening every day. A cake of Pan Tea's tea was once speculated to a high of 120,000 yuan, a truly unparalleled success. It became widely known for its rags-to-riches story, earning a small target in a year.

Not only did Pan Tea take root domestically, but it also quickly expanded globally. At that time, its advertisements appeared on the streets of New York, USA, and Paris, France, and it even opened its first transnational flagship store in South Korea.

In just two years, Pan Tea achieved such remarkable performance. What was the secret to its success? It turned out that it was not based on industry, but on a financial game of hot potato.

According to an investor, Mr. J, the tea business was not easy to do, but after seeing friends make money from investing in Pan Tea, he was tempted. He then spent less than 50,000 yuan to buy three types of tea. When purchasing Pan Tea, one could choose different terms from 15 to 74 days, with longer terms promising higher returns from Pan Tea, typically ranging from 15% to 30%.

However, when the products Mr. J bought matured, Pan Tea refused to pay out, citing that their bank accounts were frozen, and claimed that they would only be unblocked in early August. But when he waited patiently until early August, instead of the unblocking, he received a restructuring announcement.Mr. J has been deeply involved in the tea industry for many years. Having experienced multiple companies absconding, he immediately realized that this could be a scam, a classic "pig butchering" scheme. In Mr. J's view, this is a game of hot potato, with the snowball effect growing larger and larger. In order to cash out the previously promised high interest rates, Pan Tea can only continuously attract new investors to sustain the game. Once no one enters, the funding scheme will collapse immediately.

Another investor, Mr. W, stated that throughout the entire transaction process, neither party actually signed a formal contract, and investors would only receive a receipt.

According to media reports, the amount involved in Pan Tea may exceed ten billion and be unable to be cashed out. In a certain town in Anxi, Fujian, there were up to seven Pan Tea dealers at their peak, with many locals investing. Their investment alone could reach 3 billion yuan, and now there is no way to cash out.

In fact, Pan Tea's operations bear a striking resemblance to the previously exploded Chang Shi Tea.

Chang Shi Tea initially launched four tea products, named "Chang Shi Tian Xia," "Chang Shi Ming Ya," "Chang Shi Tong Ji," and "Chang Shi Heng Tai." The names of these products are all grand and elegant, but they cannot change the fate of the explosion.

Chang Shi Tea promised that after a certain period, it would repurchase these products at a price higher than what the investors bought them for. Although this was just a verbal promise, investors disregarded the risks and believed that as long as they participated, they could profit.

In addition, Chang Shi Tea also engaged in "scarcity marketing," restricting the purchase of products, with individual investors only able to subscribe to 2 to 3 batches, artificially creating a sense of product scarcity.

For the first four batches of products, investors could achieve an average monthly return of 4,000 to 5,000 yuan, so more and more people participated in the transaction, and the product prices also rose accordingly. In just three months, the unit price was speculated from around 30,000 yuan to a maximum of around 70,000 yuan.

At this time, Chang Shi Tea did not brake in time, but instead, took advantage of the heat and launched the fifth product "Chang Shi Xiong Feng" on November 28, 2023, without any purchase restrictions, with a unit price as high as 52,000 yuan, far higher than the previous four.

Moreover, Chang Shi Tea also found "shills" to continuously inflate the price at 52,000 yuan, 52,500 yuan, 53,000 yuan, and 53,300 yuan, and also adopted methods such as sending red packets to attract more investors to participate. After investors participated, they would bring more people, further absorbing a large amount of funds.The outcome was, naturally, predictable: the price more than doubled, and anyone who would repurchase at such a high price would be a fool. On November 30, 2023, Changshi Tea "trust" was only willing to repurchase at a unit price of 44,000 yuan, which was a full 8,000 yuan lower than the investors' purchase price of 52,000 yuan per unit.

There was no bottom, only lower. By December 1, 2023, the repurchase unit price of Changshi Tea had plummeted to 2,000 yuan, causing investors to collapse in despair. The curtain on the "financial tea" crash was thus fully drawn. Preliminary estimates indicate that more than 500 investors participated in the Changshi Tea transactions, with amounts totaling up to 500 million yuan.

In retrospect, it is clear that these were obvious Ponzi schemes, but why were those involved in the scheme unaware? There are many factors at play, such as a significant human weakness: the desire to take advantage of situations. People are often unwilling to endure hardship and always yearn for a shortcut to wealth. Ponzi schemes exploit this mentality, luring people step by step into the abyss with the promise of high returns.

Furthermore, information asymmetry and manipulation are also key factors that allow scams to persist. The scammers often have more information than their victims and meticulously design complex product systems that are virtually impossible for non-experts to see through.

However, it cannot be denied that this is also greatly related to the investors' cognitive biases and a mentality of luck. Take the case of Pan Tea and the previous Changshi Tea as examples; why did they both occur in Fangcun? Many tea merchants in Fangcun have a tradition and preference for "tea speculation," after all, the profits from tea speculation are much higher than those from normal business operations.

Regrettably, these tea merchants, believing themselves to be experienced in "tea speculation," were overconfident in their ability to outsmart the market. Some of them, even knowing that it was a game of hot potato, did not believe they would be the last "holder."

This mysterious self-confidence led to an insufficient understanding of "Ponzi schemes," inadequate prevention, overestimation of their own capabilities, and a significant underestimation of market risks, ultimately becoming the final "holder" of the "financial tea."