An infamous Ponzi scheme that resulted in substantial losses for investors across Africa may be rearing its head again, albeit in a slightly different guise.
The FSCA has warned the public to be cautious when participating in MMM Krypto’s mutual aid fund (MMM Krypto). It has come to the attention of the FSCA that MMM Krypto might be rendering financial services to members of the public in South Africa.
In a media statement released this week, the Authority said that it had received information that MMM Krypto might be rendering financial services to members of the public in South Africa.
According to the FSCA, MMM Krypto uses videos on YouTube, TikTok and Facebook, as well as referrals to encourage members of the public to participate in MMM Krypto’s scheme. MMM Krypto promises its participants returns of between 24% and 36% per month, the Regulator stated.
“The FSCA is concerned about the unrealistic monthly returns offered to members of the public in South Africa. Without commenting on the business of MMM Krypto, the FSCA points out that offering financial products or services in South Africa requires authorisation by the FSCA. MMM Krypto is not licensed under any financial sector law to provide financial products or financial services in South Africa.”
The Regulator stated that MMM Krypto was not available for comment.
The FSCA said it had referred the MMM Krypto to the National Consumer Commission for further investigation.
What is MMM Krypto?
The MMM Krypto website describes itself is a “worldwide mutual aid fund”, “a financial social network”, a “world people’s bank” and a “voluntary informal association made up of millions of people globally” who “have declared a war against the banks and the FED”.
Sifting out the site’s verbose rhetoric, it seems that the “fund” positions itself as an alternative to banks – “a type of common storage where people can save their money for the future when it might be needed”.
How does it work?
The idea sold to participants is that they ask for financial help when they need it and give their financial help when they can.
Actually, it is the other way around. Participants must give before they may receive.
And there is no guarantee that they will receive “help” once they do request it.
To join, participants need to create their MMM Krypto personal office account and click “provide help”.
After that, their account will be credited with Mavro (the system’s internal currency), MMM Krypto says.
“Mavro’s amount will start to grow from the moment of deposit every day,” the website reads.
However, the website stipulates that participants can only request help after they have made a transfer to assist another participant. Only then is their Mavro account “confirmed”.
“(An) order for providing help comes to you in your Personal Office account MMM. If you do not complete it within 36 hours, you will be blocked from the System!” the website reads.
These “transactions” are done via Tether (USDT) – one of the largest stablecoin by market capitalisation. Crypto traders use stablecoins like Tether to make transfers between different cryptocurrencies or to move their investments into or out of fiat currencies.
MMM Krypto claims that there is no сentral account where the money is deposited and that participants transfer Tether (USDT) directly to each other “without intermediaries”. It claims that MMM only regulates the process.
Participants who might end up losing money in the future, will also not have the luxury of claiming that they weren’t warned.
In bold red letters, highlighted in yellow, the website states that there are no guarantees and promises.
“And in general, you can lose all your money. Always remember about this and participate only with spare money. Or do not participate at all!” the website reads.
Shades of the past
On 7 December last year, MMM Krypto uploaded a video titled “MMM is back with a Big Bang” on YouTube. The video was reportedly shot in Durban a few days earlier at an MMM Krypto rebranding event. In the background of the video is a promotional stand-up banner with the words “earn up to 36% referral bonus, guider bonus, rank bonus” printed on it.
The YouTube video sparked reports in African media of “Mavrodi Mondial Moneybox’s (MMM) alleged comeback”.
Business Elites Africa, a business and lifestyle publication, wrote last month that there was concern that MMM, a notorious Ponzi scheme that previously wreaked financial havoc across Africa, was reportedly making a comeback as MMM Krypto.
MMM’s roots can be traced back to Russia where it was launched by the late Sergei Mavrodi in 1994. The scheme promised annual returns of up to 3 000%. At its zenith, the scheme raked in millions of US dollars daily by selling shares to the public.
Mavrodi, arrested in 2003 and convicted of fraud in 2007, expanded his scheme to developing countries in Asia and Africa from 2011, enticing participants with monthly returns of 30%. The scheme operated under the guise of a “global fund of mutual aid”, urging participants to send financial help with the promise of receiving more in return during times of need.
Countries like South Africa, Zimbabwe, Nigeria, and some in East Africa were especially impacted. In 2017, the Nigerian Deposit Insurance Corporation revealed that around three million Nigerians lost N18 billion to MMM. Following the death of the founder, Sergei Mavrodi, in 2018, the scheme officially declared its closure.
Tumi Links Investments
The FSCA has also issued a public warning against Tumi Links Investments.
“Tumi Links has offered to trade in forex products, amongst others, on behalf of members of the public. Tumi Links is not licensed in terms of any financial sector law to provide financial products or financial services and was unavailable for comment,” the Authority said.
Be safe, be sure
The FSCA points out that, for a person to offer financial products or services in South Africa, they must be licensed to do so by the FSCA. Members of the public should always check:
- that an entity or individual is authorised by the FSCA to provide financial products and services, including for giving recommendations about how to invest.
- what category of advice the person or entity is registered to provide, as there are instances where companies or people are registered to provide basic advice for a low-risk product and then offer advice on far more complex and risky products.
- that the FSP number utilised by the entity or individual offering financial services matches to name of the FSP on the FSCA database.
One of the following methods may be used to confirm the status and FSP number of a service provider or a person that claims to be an authorised service provider:
- Toll-free number: 0800 110 443
- Online search for authorised financial institution by license category: https://www.fsca.co.za/Regulated%20Entities/Pages/List-Regulated-EntitiesPersons.aspx
- Online search for a financial institution that is an authorised FSP in terms of the FAIS Act: https://www.fsca.co.za/Fais/Search_FSP.htm
