Chinese Government warns citizens about MMM Bitcoin Ponzi scheme

Chinese Government warns citizens about MMM Bitcoin Ponzi scheme

The Chinese Government has warned its citizens to stay away from infamous Bitcoin investment program MMM Global, as the service was nothing more than a Ponzi scheme.

According to local reports, the warning, published by the central bank, the banking regulator, the Ministry of Industry and Information Technology and the State Administration for Industry and Commerce, said MMM China (the local version of the scam) is among an emerging number of unlicensed organizations that aim to attract online investors with promises of high returns while employing a business model that looks to be a Ponzi scheme.

The announcement noted that these websites often advertise themselves as platforms that facilitate “financial mutual assistance” to each other rather than investment services, and they encourage existing investors to invite others by rewarding them with money from the newcomers.

“Such operating models present huge investment risks and their capital flows are not sustainable,” the warning reads. “Once the capital chain breaks, investors will face severe losses.”

MMM China first came to our attention back in November 2015 when there was strong speculation that growing investment in the scam in mainland China was causing the price of Bitcoin to wildly fluctuate.

The scam claims to offer a 30 percent monthly return to investors through what it calls a “mutual-aid program,” with investors able to invest as little a $10, payable by Bitcoin.

A side program called “MMM Extra” offers a return of 100 percent per month or the staggering sum of 409,600 percent cumulatively per year.

Users are also able to obtain bonuses for referrals or posting testimonials online, with users receiving 10 percent from what the company refers to as “all donations of the participants you invited,” and are also able to sign up to a multi-level marketing style referral scheme that allows members to become “managers” who “create their own multi-level structure” offering tiered bonuses from “all contributions of the members of their structures.”

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Russian scam

As we noted in our previous coverage, the scam is a recycled version of a Ponzi scheme run by Sergey Mavrodi, a former Russian parliamentarian since jailed for fraud for running the exact same scam under the same name in Russia itself.

The scam is open to anyone globally but primarily targets poorer countries or those without adequate financial safeguards in what seems to be an intentional ploy by Mavrodi to avoid attention in countries with adequate legal protections.

It probably goes without saying, but if you’re approached by anyone asking you to invest in MMM Global, MMM China or any similar MMM derivative, keep your Bitcoins safe and stay well away.

Update: for more information see out post “everything you need to know about the MMM Bitcoin scam.”

Image credit: MMM/screenshot
Duncan Riley

Duncan Riley

Duncan Riley is a senior writer at SiliconANGLE covering Startups, Bitcoin, and the Internet of Things.

Duncan is a co-founder of VC funded media company B5Media and founder of news site The Inquisitr, and was a senior writer at TechCrunch in its earlier days.

Tips? Press releases? Intersting startup? email: duncan@nichenet.com.au or contact Duncan on Twitter @duncanriley
Duncan Riley

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