MMM’s Bitcoin comeback

Currency makes it difficult to track cyber crime kingpins

PROMISES of 30% returns and a new world order – it’s MMM reloaded with a new currency that will make it even harder for law enforcement to catch the kingpins and fight cyber-crime.

Nine months after the global pyramid scheme collapsed in South Africa and Nigeria, it announced earlier this month on its Facebook site that it would introduce a new cyber-currency linked to Bitcoin called the Mavro-BTC.

“Due to the recent sharp price fluctuations of Bitcoin, MAVRO-BTC is being introduced in the System,” read a January 8 post on its Facebook page. Ten days later, in an updated post, its programmers announced they were introducing the New Model, and this was why members were battling to log on.

“Now, you have a chance to have 30% growth of the Bitcoin amount, not the rand amount.

“So, acquire MAVRO-BTC, which will be credited in your PO and will grow at a 30% monthly growth rate. In a month, not only 30% will be added (sic) to your initial amount, but it can increase itself (sic) due to the Bitcoin price growth.”

But it’s the use of Bitcoin, which has become the currency of choice for international cyber-criminals, that has investigators worried.

“They’re using it because it is very difficult to trace. You try and follow the money trail and it disappears into cyberspace,” says Danny Myburgh, a cyber-crime investigator.

The scheme could further launder the money by moving it from one Bitcoin wallet to the next, he says.

Bitcoin, which is known as a cryptocurrency, is not regulated by any bank. Transactions take place between individuals without an intermediary.

“You combine this with the Dark Web and it’s impossible to trace.”

Myburgh, however, adds that while it might be preferred by international criminals, Bitcoins are traded by legitimate users and accepted by more and more retailers.

Fellow cyber-investigator Jacques van Heerden says he also noticed more criminals using Bitcoins, pointing out this was the currency used on the infamous drug website, The Silk Road.

“Virtual currencies do make it slightly more complicated to follow the money, but there are processes you can follow,” said Brigadier Piet Pieterse, the section head of the Hawks cyber-crime unit.

The Hawks, he said, have had successes in catching cyber-criminals using virtual currencies.

Collapsed

By watching what criminals overseas were up too, they could predict modus operandi in South Africa.

MMM has its origins in Russia where it was launched in the 1990s by its founder Sergei Mavrodi. When it collapsed, it’s believed investors lost billions of dollars, though the exact amount is unclear.

In 2011 MMM Global was launched, and began targeting third world countries, in particular.

Maya Fisher-French, a financial journalist who has studied MMM, says the scheme’s success lies in its ability to reinvent itself.

Those who invest in the scheme are often aware that it is a pyramid scheme and that they can lose their money, she points out.

“The more astute investors know that if they get in early they are able to generate good money, but it is important to keep the story going so more people join.”

This is why they are opposed to the media, resorting to writing fake news stories.

MMM claims that its goal is not just to make money but to fight the unjust financial system.

But Fisher-French says: “The big concern is money laundering. Someone is making money. How do you know that those investor bank accounts you are given to make deposits in, that one of them does not belong to the individual behind the MMM system? It’s also a way for cash obtained through illegal activities to be ‘washed’ through the system.”

The Hawks are investigating MMM after the National Consumer Commission conducted its own investigation, and passed its findings on to the police.

But the problem, say police, is that participants in the MMM scheme are unwilling to come forward. “An enquiry was opened and efforts to get statements from affected investors drew a blank,” explains Hawks spokesman Hangwani Mulaudzi.

“The enquiry is yet to be closed and for the record no case docket was registered.”

Participants in the scheme have broken the law and are reluctant to approach the police even after they have lost money.

“The only way you can tackle this is through international co-operation and the new Cyber Crimes and Cybersecurity Bill will help with this,” said Myburgh.

The Department of Justice published the Bill this week.

Meanwhile, as MMM continues its relaunch, some of its members are demanding payment on the old currency the scheme used.

Mavros, the old currency accounts, were frozen and media and banking institutions were blamed.

“Why (are) the remaining outstanding balances of R100’s still not allocated? At first it was Old Mavros, now it’s New mavros (still frozen bcoz of remaining balances),” wrote Monica Nospho Nojiwa in a Facebook post a week ago.

This week an alleged “MMM number 1 guider” in Nigeria, Chuddy Ugorji, and his wife, Amaka, reportedly fled the country after he released new conditions for payment to about three million investors.