3M scam makes a comeback, Bitcoin becomes the payment of choice

Nigeria’s 3M, a famous multi-market Ponzi scheme, has announced its comeback and has made Bitcoin an acceptable form of payment. Founded in Russia in the 1990s by Sergei Mavrodi, 3M collapsed after costing participants billions of dollars in losses.

However, the scam has resurfaced due to a simple operating model: the upstream party promises the downstream party to extract 30% of the profits from other participants one month after investing the funds.

There is a high risk that this lending chain will collapse, which could end up costing millions of dollars again. Yet despite all the bad press and obvious flaws in its model, 3M’s list of participants continues to grow.

In mid-December 2016, 3M froze the accounts of its participants. It is reported that this move affected more than 3 million Nigerians. Soon after, 3M’s official statement explained that they had to temporarily stop operations due to system overload.

MAVRO-BTC

A month later, 3M resumed normal operations and launched a Bitcoin-based currency MAVRO-BTC (named after the founder), which aims to "create a more comfortable user experience for 3M." Before freezing the participants' accounts, 3M had already accepted a lot of Bitcoin, but it would eventually be converted into Nigerian legal currency Naira.

In this comeback, in addition to the original Naira, 3M plans to explore Bitcoin, a new payment method. In view of the recent upward trend of Bitcoin prices, 3M has promised participants other benefits besides "30% monthly average income". Once the price of the currency drops, 3M promises that the Bitcoin in the hands of participants can be converted into Naira.

3M's return plan has thrown out many attractive conditions, aiming to revitalize its community atmosphere. 3M has released various online and offline tasks and invited participants to participate, so as to achieve the purpose of promoting 3M and increasing participation. From this point, it is obvious that 3M participants are not only given the opportunity to gain benefits, but also bear the responsibility of promoting 3M.

Regulators issue warning

The domestic capital market regulator, the Nigerian Securities and Exchange Commission (SEC), subsequently responded by warning the public about investing in cryptocurrencies such as Bitcoin.

The SEC has noticed that the public has invested in virtual or digital currencies such as Swisscoin, OneCoin, and Bitcoin due to radio advertisements and other instigative methods. The SEC hereby reminds the general public to be vigilant about digital currency investment tools.

The SEC reminds the public that any company involved in cryptocurrency investment business is not officially recognized and has no right to collect funds. Therefore, once such scams collapse, consumers will not be protected from losses caused by digital currency investments.

(3M founder Sergey Mavrodi)

Money Laundering Scam

Although Bitcoin is now more commonly used as a payment method by law-abiding users and merchants, investigators are still concerned about the use of virtual currencies by international criminals, which could undoubtedly tarnish Bitcoin's public image.

Danny Myburgh, managing director of computer crime investigation firm Cyanre, commented:

The reason they (criminals) prefer cryptocurrencies is because they are untraceable. Once you try to find a trace of a certain amount of money, it disappears in cyberspace. Various scams can launder money by switching funds between multiple Bitcoin wallets.