Cyber pyramid scheme returns

Police brace for ‘difficult’ job to nab culprits

PROMISING 30% returns, while standing against greed and hard cash, is MMM reloaded and, like before, catching the kingpins behind this pyramid scheme is going to be difficult.

Earlier this month, MMM, the global pyramid scheme, announced on its Facebook site that it would be introducing a new currency, linked to Bitcoin, called the Mavro-BTC.

This comes nine months after the online scheme collapsed in South Africa and Nigeria. “Due to the recent sharp price fluctuations of Bitcoin, MAVRO-BTC is being introduced in the system,” read the Facebook Post on January 8.

Ten days later, an updated post said that its programmers 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 to your initial amount, but it can increase itself due to the Bitcoin price growth,” MMM’s website added.

But it is the use of Bitcoin that has cyber investigators worried. Bitcoin has become the currency of choice for international criminals.

“They are using it because it is very difficult to trace. You

but there are processes you can follow

try and follow the money trail and it disappears into cyberspace,” said cybercrime investigator Danny Myburgh. He said criminals could further launder the money by moving it from one Bitcoin wallet to the next.

Bitcoin, which is known as a cryptocurrency, is not regulated by any bank, and transactions take place between individuals without an intermediary. “You combine this with the Dark Web and it is impossible to trace,” he said.

Myburgh said, however, that while it might be preferred by international criminals, Bitcoin was also used by legitimate users and being accepted by more and more retailers.

Another investigator, Jacques van Heerden, said he had also noticed more criminals using Bitcoins, pointing out that this was the currency used on the infamous drug website The Silk Road.

Brigadier Piet Pieterse, the section head of the Hawks Cyber Crime Unit, said: “Virtual currencies do make it slightly more complicated to follow the money, but there are processes you can follow.”

He said the Hawks had successes in catching cybercriminals using virtual currencies in the past.

Pieterse said by watching what criminals overseas were up to, investigators could predict what modus operandi would be used 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 is believed that investors lost billions of dollars. No one is sure of the exact amount. In 2011, MMM Global was launched, and began targeting in particular Third World countries.

Maya Fisher- French, a financial journalist who has studied MMM, said the pyramid scheme’s success was its ability to reinvent itself. Those who invest in the scheme, she said, are often aware that it is a pyramid scheme, and that they could lose their money.

“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,” she explained.

MMM claims that its goal is not just to make money but to fight the unjust financial system. “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 is also a way for cash obtained through illegal activities to be ‘washed’ through the system,” Fisher-French said.

The Hawks are investigating the organisation after the National Consumer Council (NCC) conducted its own investigation into MMM. The NCC then passed their findings to the SAPS.

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. The enquiry is yet to be closed, and for the record, no case docket was registered,” said Hawks spokesperson Hangwani Mulaudzi.

The Department of Justice published the Cybercrimes and Cybersecurity Bill this week, and this, according to Myburgh, will allow South African police to better co-operate with overseas law-enforcement agencies when dealing with cybercrime.

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

On April 30, MMM issued a statement saying: “In general, in this situation, we have to declare a restart and start all over again. We have no choice.”

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

But some people still support the scheme, evident in their positive messages on Facebook.

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