SEC warns Nigerians against new Ponzi scheme

The Securities and Exchange Commission has raised the alarm over the activities of some online fraudsters, who are currently running an online investment scheme, tagged ‘Loom Money Nigeria’.

Loom Money Nigeria is taking over social media by luring young people to participate in a pyramid scheme.

The acting Director-General, SEC, Ms Mary Uduk, while speaking during a press conference in Abuja on Thursday, gave the warning, saying Ponzi scheme investors were at risk.

Uduk, who was represented by the acting Executive Commissioner, Operations, SEC, Mr Isyaku Tilde, said the fraudsters carried out their illegitimate business activities via social media platforms like Facebook and WhatsApp, luring young Nigerians to invest as low as N1,000 and N13,000 and get as much as eight times the value of the investment in 48 hours.

Uduk said the venture had no tangible business model, describing it as a Ponzi scheme where returns would be paid from other people’s invested funds.

She said, “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.

“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.”

Uduk advised the general public to distance themselves from the scheme, saying, “Please note that anyone that subscribes to this illegal activity does so at their own risk.”

She also said an inter-agency committee, Financial Services Regulation Coordinating Committee was working on the issue while also collaborating with security agencies to shut them down.

The Loom Pyramid Scheme is not new to the world. Last month, Daily Mail UK reported that the scheme has resurfaced online all over the world, with different names such as ‘loom circle’, ‘fractal mandala’ and ‘blessing loom’.

In Nigeria, its central name is Loom Money Nigeria, with individuals creating their own WhatsApp groups such as Jack Loom and Catherine Loom.

Investors were advised by SEC to learn from the experiences with MMM.