Russian Fraudster Lures Thousands in Kenyan Pyramid Scheme with a Bitcoin Twist
For the past year, Kenyans have been lured with the promise of making money quickly through a pyramid scheme started by convicted Russian fraudster, Sergey Mavrodi, reports the Daily Nation, a Kenyan news site.
Mavrodi is reported to have designed a major pyramid scheme in Russia before its end came in 1997, which is believed to have conned an estimated $100 million out of its members. He was later sentenced to four and a half years in prison in 2007 for defrauding 10,000 investors of around $4.3 million. This is the same man who set up MMM Global giving promises to Kenyans interested in the latest MMM Kenya pyramid scheme that they would receive up to 100 percent returns.
As part of the scheme, members are informed that if they donate money to the needy they will be rewarded, earning points in the digital currency, bitcoin. Not only that, but for people who want financial freedom, they are promised this as well as an opportunity to ‘change the world.’
The idea behind this scheme is that you give to the network and in turn wait for others to give back to you. It is portrayed that the more you give, the more you receive.
Mavrodi is reported to have said on his website that:
This is not a pyramid scheme, not a bank or an online business.
Warning the Public
It’s reported by the Daily Nation, that the Central Bank of Kenya (CBK) warned the public; however, they didn’t refer specifically to MMM. Instead, they said that digital currencies such as bitcoin are not legal in Kenya and have no protection attached to them if they should fail.
Transactions in virtual currencies such as bitcoins are largely untraceable and anonymous, making them susceptible to abuse by criminals in money laundering and financing of terrorism.
How the Scheme Works
Once an individual joins MMM, they are asked to donate not less than $10 before they can then ask others in the chain for help.
After a donation has been made an individual is promised to receive 30 percent of the amount they donate.
The more people who join the more bonuses a person can get through points called Mavros.
MMM Under Investigation
Unfortunately, this isn’t the first, nor will it be the last, time that Mavrodi has initiated these types of Ponzi schemes designed to make money off the backs of vulnerable people.
In April 2016, MMM Global’s franchises, Republic of Bitcoin, was shut down while MMM South Africa is alleged to be under criminal investigations by the National Consumer Commission. MMM Zimbabwe has already fallen after the number of those in need outnumbered those joining.
Images from Shutterstock and Wikipedia.