{"id":53165,"date":"2016-04-12T16:00:23","date_gmt":"2016-04-12T14:00:23","guid":{"rendered":"http:\/\/www.arabtelegraph.com\/?p=53165"},"modified":"2016-04-12T16:00:23","modified_gmt":"2016-04-12T14:00:23","slug":"alleged-sa-ponzi-scheme-mmms-global-pyramid-collapses","status":"publish","type":"post","link":"https:\/\/www.arabtelegraph.com\/?p=53165","title":{"rendered":"Alleged SA Ponzi scheme MMM\u2019s global pyramid collapses"},"content":{"rendered":"

Russian convict Sergey Mavrodi has allegedly gone into hiding after announcing that his Bitcoin-based MMM Global scheme had failed and was shutting down this weekend.<\/strong><\/p>\n

MMM South Africa \u2013 its local branch – is one of nine companies being investigated for being an alleged Ponzi scheme by the South African Police Service\u2019s Specialised Commercial Crimes Unit, after the National Consumer Commission\u2019s initial probe in 2015.<\/p>\n

The South African \u201ccommunity\u201d has been growing in numbers over the years, as South Africans seek ways to escape debt and poverty. It has even been described as a stokvel <\/em>by some, and has become an emotive topic for those who buy into it.<\/p>\n

Officially, the SA platform said its members are encouraged to donate money to others by rewarding them with the bitcoin-linked virtual currency – Mavros – in return, and can apparently get 30% return on their rand investment by doing so. A Ponzi scheme occurs when a return is 20% higher than the repo rate, which in SA is 7%.<\/p>\n

\u201cWe regret to inform you that we have to close down the Republic of Bitcoin. It was an experiment, and, unfortunately, it failed,\u201d the last . \u201cWe turned out not to be able to pay 100% per month.\u201d<\/p>\n

The alleged scheme is based on the bitcoin currency, which is a digital asset and a payment system.<\/p>\n

The South African version of MMM, which offers 30% returns, is still operational and said the crash will not affect is members.<\/p>\n

MMM Global cannot sustain paying<\/strong><\/p>\n

A website that investigates multi-level marketing schemes predicted the collapse a few days before it happened.<\/p>\n

On April 9, it revealed the implosion. \u201cThe financial apocalypse is upon us, MMM Global has collapsed,\u201d<\/p>\n

\u201cMMM Global\u2019s Ponzi clones offering a lower percentage haven\u2019t \u2018proved\u2019 themselves any more than MMM Global did,\u201d it said.<\/p>\n

\u201cMMM Global cannot sustain paying out more than is invested. And as long as affiliate investment is the only source of revenue entering the scheme, any MMM Global scheme will ultimately collapse.<\/p>\n

\u201cThey\u2019ll continue to pay ROIs (return on investments) until withdrawals exceed the rate of new investment, and then run out of money all the same. One only needs to look at the collapse of MMM China for evidence of what\u2019s to come.<\/p>\n

\u201cUnfortunately for most MMM Global investors, the collapse is the end of the line. Those unlucky enough to live in countries where MMM Global runs secondary scams (like South Africa), were informed their accounts would be transferred over.\u201d<\/p>\n

Mavrodi has executed his exit strategy – claim<\/strong><\/p>\n

BehindMLM said Mavrodi \u201cexecuted his exit strategy a few weeks ago. On March 20th Mavrodi informed investors there would be no more news updates published to the MMM Global website\u201d.<\/p>\n

\u201cMavrodi has not been heard from or seen since, and is presumed to be on the run. It\u2019s highly likely he withdrew and\/or transferred out as much of the money he stole from investors before fleeing.\u201d<\/p>\n

\u00a0reported on Monday that, while it is yet to confirm with its Mavrodi sources, \u201cif internet reports are anything to go by it looks like Mavrodi\u2019s latest scheme \u2026 dubbed a \u2018mutual aid social network\u2019 \u2026 collapsed over the weekend, with thousands of investors (a lot of them in emerging markets) locked out of investment accounts they had been promised would yield them 100% returns per month\u201d.<\/p>\n

Have you been affected?<\/strong><\/p>\n

MMM follows classic pyramid structure – City Press
\n<\/strong><\/p>\n

Consumer journalist Maya Fisher-French unpacked the South African MMM scheme on March 30, predicting that it would collapse soon.<\/p>\n

“With increasing concerns around the viability of MMM and an investigation under way by the police, no doubt to be followed by the Receiver of Revenue, it appears likely that MMM will collapse sooner rather than later,”she wrote.<\/p>\n

“Based on the information provided on the website, MMM follows a classic pyramid structure,” she said. “The participants derive their income or returns primarily for the recruitment of new members. In other words, the returns are not based on investments or the selling of any product, but on money paid by new people joining. The philosophy is that you offer assistance by paying a joining fee.”
\n<\/strong><\/p>\n

FULL STORY:<\/strong><\/p>\n

MMM SA defends operation<\/strong><\/p>\n

However, MMM Global South Africa refuted the claims that it was a Ponzi scheme or that it was collapsing on Monday.<\/p>\n

\u201cIn the MMM community there are many different countries,\u201d a member of the MMM SA team said in a Facebook message to Fin24 on Monday.<\/p>\n

\u201cOne of them was the Republic of Bitcoin. It was a \u2018synthetic\u2019 country which united participants from many different countries who provided and received help with bitcoins.<\/p>\n

\u201cSometimes it created confusion for the people, they asked whether they should join the Republic of Bitcoin (RB) or MMM SA, RB or MMM France, etc.<\/p>\n

\u201cWe decided to dissolve the Republic of Bitcoin and people will continue to participate in their specific countries. So, those South Africans who participated in the Republic of Bitcoin will be moved to MMM South Africa. And people will be able to continue to participate and will continue to receive help on the South African Platform.\u201d<\/p>\n

MMM South Africa calls itself “a community of ordinary people, selflessly helping each other” on its colourful website. “The goal here is not the money. The goal is to destroy the world’s unjust financial system.”<\/p>\n