Cape Town - While MMM confirmed that its electronic currency Bitcoin exchange had collapsed, South African participants, in what has been dubbed a Ponzi scheme, said they would continue to invest their money, confident they would receive a 30 percent return.
MMM was started by convicted Russian scammer Sergey Mavrodi in the former Soviet Union in the late 1980s. He would replicate the formula in other countries, moving his operation online and eventually launching in South Africa in August last year.
With news of MMM’s troubles filtering through slowly on Tuesday, a Nigerian who runs the scheme’s office at Cape Town train station said the news did not leave him concerned.
“There’s nothing illegal about it, this is like a stokvel… If you’ve got spare money to invest, you can get 30 percent of that money at the end of 31 days,” he said.
One participant, Patrick Dilapiso, from Kimberley, defended MMM, saying it was not a Ponzi scheme.
“There’s no fraudulent or criminal activity, there’s no central banking account for the system,” said Dilapiso.
Participants are encouraged to recruit more people into the MMM system and register their names and cellphone numbers on the scheme’s website.
Those joining are expected to write down their “dreams”, then members of the scheme will deposit money into the individual’s account to “achieve” their dream whenever they wanted to withdraw money from the scheme.
“Before you send money, you can call that person to confirm his account number and then send the proof of payment,” said Dilapiso.
In February he had “invested” R5 000 into the scheme and said he was hoping to withdraw R170 000 by March next year.
National Consumer Council spokesperson Trevor Hattingh said the body had conducted an assessment of MMM to see whether there were any contraventions of the Consumer Protection Act.
“We found something, but we’re not going to disclose that… We’re still working with the Hawks. A pyramid scheme (is) fraudulent, fraud is a criminal matter and that can only be investigated by the police,” said Hattingh.
Hawks spokesperson Hangwani Mulaudzi said:
“There is an inquiry that has been opened. We’re having a slight challenge in the fact that the scheme is being run through the internet.
“We’ve enlisted the help of the (police’s) cybercrimes unit and the Financial Intelligence Centre. Another challenge is that we have not received any complaints from the investors. We want to encourage them to come forward.”
@mtyala
Cape Times