Ponzi scheme reboot

MMM’s return sparks money laundering fears

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 be introducing a new cyber-currency linked to Bitcoin called the Mavro-BTC.

“Due to the recent sharpprice 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. 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 inter national 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,” says Brigadier Piet Pieterse, the section head of the Hawks cyber-crime unit.

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

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 Sergei Mavrodi. When it collapsed, it’s believed investors lost billions of dollars.

In 2011, MMM Global was launched, and began targeting Third World countries, in particular.

Maya Fisher-French, a financial jour nalist 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.

“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.”

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.”

The Hawks are investigating MMM, but the problem, say police, is that participants are unwilling to come forward.

And supporters of MMM, such as Hlompho Motsamai, continue to view it as a money-making scheme. She wrote on Facebook recently: “Viva MMM. Together we can change the world.”