Mary Uduk, the Acting Director General of the Securities and Exchange Commission (SEC), has warned Nigerians against the activities of the fraudsters who are behind the latest ponzi scheme in the country — Loom Money Nigeria.
Ms Uduk gave the warning during a joint press conference in Abuja with the Minister of Finance, Mrs Zainab Ahmed.
According to Uduk who was represented by SEC‘s Acting Executive Commissioner of Operations, Isyaku Tilde, the fraudsters carry out their illegitimate business activities via social media platforms such as Facebook. They target young Nigerians, luring them to invest as low as N1000 and N13,000 to get as much as 8 times the value of the investment in 48 hours.
According to the Acting DG, Loom Money Nigeria had no tangible business model. She, then described the digital venture as a Ponzi scheme, where returns would be paid from other people’s invested funds.
“We are aware of the activities of an online investment scheme tagged ‘Loom Money Nigeria’. The platform has embarked on an aggressive online media campaign on Facebook and whatsapp to lure the investing public to participate by joining various Loom whatsapp groups to invest as N1000 and N13,000 and get as much as 8 times the value of the investment in 48 hours.
“Unlike MMM that had a website and the promoter known, the people promoting Loom are not yet known and this pyramid scheme operates through closed groups mainly on Facebook and Whatsapp. If it were a local Ponzi scheme with known offices, it would be very easy for the Commission to seal their offices and freeze their accounts.
“We therefore wish to notify the investing public that the operation of this investment scheme has no tangible business model hence it’s a Ponzi scheme, where returns are paid from other people’s invested sum. Also, its operation is not registered by the Commission.”
Loom Money Nigeria is the latest ponzi scheme in the country. It is a peer-to-peer pyramid scheme that follows the same pattern as the now collapsed MMM.