Guys, let me let you know something really important about this MMM trending in Nigeria currently
Guys, let me let you know something really important about this MMM trending in Nigeria currently…
Just yesterday, the Securities and Exchange Commission (SEC), warned the public on the activities of some online investment scheme currently making waves tagged ‘MMM Federal Republic of Nigeria. MMM Nigeria was launched in 2016 primarily targeting the Nigerian audience.
According to SEC, the promoters of the scheme carry out their business activities via Nigeria.mmm.net portal/platform, and are promising investors a monthly investment return of 30 per cent.
SEC said the venture had no tangible business model, describing it as a Ponzi scheme, where returns would be paid from other peoples’ invested funds.
The notice on SEC’s website thus read, “The attention of SEC, Nigeria has been drawn to the activities of an online investment scheme tagged ‘MMM Federal Republic of Nigeria (nigeria.mmm.net). The platform has embarked on an aggressive online media campaign to lure the investing public to participate in what it called ‘mutual aid financial network’ with a monthly investment return of 30 per cent.
“The commission hereby notifies the investing public that the operation of this investment scheme has no tangible business model hence it’s a Ponzi Scheme, where returns are paid from other people’s invested sum. Also, its operation is not registered by the Commission.”
SEC, therefore, advised the general public to be wary of the online scheme, adding that anyone that subscribes to this illegal activity does so at his/her own risk.
We therefore bring you some facts about MMM and how it came into existence.
Origin of MMM
МММ global was a Russian company that perpetrated one of the world’s largest Ponzi schemes of all time, in the 1990s. By different estimates from 5 to 40 million people lost up to $10 billion.
The original MMM was set up by Sergey Mavrodi, his brother Vyacheslav Mavrodi, and Olga Melnikova in 1989. The name of the company was taken from the first letters of the three founders’ surnames. It morphed into a Ponzi scheme around 1994, primarily based out of Russia which resulted in Mavrodi, a former Russian parliamentarian, being jailed for fraud for running it.
The current MMM Bitcoin version emerged in around 2011 following Mavrodi’s release from prison, and follows the same Ponzi structure as the original.
What is a Ponzi scheme
A Ponzi scheme is an illegal or fradulent investment scheme where the person or organization running it pays returns to existing investors from capital paid into it by new investors, rather than profit actually earned by the company itself.
Typically companies running such schemes offer higher than usual profits.
Variations include the High Yield Investment Program (HYIP) which MMM Global falls under, in that it offers particularly high (even for Ponzi scheme) returns, or as the name suggests, a high yield.
Initially the promoter will pay out high returns to attract more investors, and to lure current investors into putting in additional money. Other investors begin to participate, leading to a cascade effect. The “return” to the initial investors is paid out of the investments of new entrants, and not out of profits. Often the high returns encourage investors to leave their money in the scheme, with the result that the promoter does not have to pay out very much to investors; he simply has to send them statements showing how much they have earned. This maintains the deception that the scheme is an investment with high returns.
Unraveling of a Ponzi scheme
When a Ponzi scheme is not stopped by the authorities, it sooner or later falls apart for one of the following reasons.
1.The promoter vanishes, taking all the remaining investment money.
2.Since the scheme requires a continual stream of investments to fund higher returns, once investment slows down, the scheme collapses as the promoter starts having problems paying the promised returns (the higher the returns, the greater the risk of the Ponzi scheme collapsing). Such liquidity crises often trigger panics, as more people start asking for their money, similar to a bank run.
3.External market forces, such as a sharp decline in the economy (for example, the Madoff investment scandal during the market downturn of 2008), cause many investors to withdraw part or all of their funds.
Reasons Why MMM Nigeria may be fradulent
1.The promise of a 30 % ROI is outrageous and not in terms with standard rates of investment (Example one makes a profit of 30,000 naira for every 100,000 naira invested in the system in 30 days , excluding additions that comes from referral, signing up and testimonial bonuses) No legal financial company can offer you that investment plan.
2.Such “Return on Investments” been paid to older clients are money received from new clients and the circle continues, the 30% is never made from company profits. That is why there is aggressive ad campaign from the company(MMM Nigeria) paying massive additional bonuses to recruiters that they call guiders to conduct seminars and deceive gullible Nigerians into joining the scheme to keep the system alive.
3.The CEO of the company(MMM Nigeria) Seigei Marvrodi is a convicted fraudster and had run similar fraud schemes in Russia where he defrauded investors over a hundred billion dollars.
At this point it is pertinent to be weary of these kind of Ponzi scheme which promise too much to be true, while many Nigerians will continue to defend the scheme, according to many #MMMPays, yes it may pay now, but just like every other fraud, it strikes at a moment the investors express much confidence in their venture. So Nigerians should be wise and avoid unrealistic business ventures like MMM Nigeria.
In January 2016 the Chinese government banned MMM on the grounds that it is a pyramid scheme, (Ponzi scheme), and it is not registered in the country (and as a fraudulent scheme cannot be registered
Categories: 9ja news
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