More Nigerians Embrace Ponzi Schemes, Bitcoin Despite CBN Warning

Matilda Omonaiye/

Nigeria has continued to witness an increase in Ponzi schemes and investment in bitcoin despite the N18 billion lost by an estimated three million Nigerians in the Mavrodi Mundial Movement (MMM) Ponzi scheme, coupled with the warning by the Central Bank of Nigeria (CBN) against participation in similar schemes, particularly those promoting investment in crypto currencies.

The Nigerian Deposit Insurance Corporation (NDIC), which disclosed the loss suffered by investors in MMM, on Thursday, also warned that any financial deal done through any ponzi scheme in form of virtual currencies, such as Bitcoin, Ripples, Litecoin and Onecoin as currencies for medium of exchange, is an Internet-based transaction‎ not authorised by the CBN.

Also in January, the CBN issued a circular to banks and financial institutions requiring them not to “use, hold, trade and/or transact in anyway in virtual currencies”, citing the need to address money laundering and terrorism financing risks to protect the integrity of the Nigerian financial system.

A significant portion of the Nigerian population are, however, not heeding the CBN’s advice and are instead embracing bitcoin, which appears to be most popular virtual currency in the country.

This trend is largely fueled by a lingering economic depression that has resulted in a sustained depreciation of the Naria.

There is also an increased interest in Ponzi schemes that have adopted the use of bitcoin, such as MMM Nigeria, which promise huge returns with the digital currency.

Due to the recent rise in bitcoin’s price, MMM decided to add the currency to its system, with a resultant increase in the number of people turning to the Ponzi scheme for quick returns.

Another factor that has aided the increasing use of bitcoin is the fact that users are aware they do not require a bank to conduct transactions. All they require is a laptop or a phone with an Internet connection.

And with 85 percent of the African population owning a mobile phone and Nigeria leading the world in mobile share of web traffic at 82 percent, they can easily and quickly conduct their business with the digital currency.

Meanwhile, the Nigeria Internet Registration Association (NIRA), on Friday, said it had mapped out strategies to deal with issues of internet abuses by various forms of Ponzi schemes such as MMM, Ultimate Cycler, Givers Forum and a lot others.

President of NIRA, Sunday Folayan, who made this known in a statement, in Lagos, said the association had established a Law Enforcement Desk to handle complaints on Domain Name abuse.

He said that NIRA would work in conjunction with relevant law enforcement agencies to stem the tide.

According to him, most Nigerians are being defrauded by various forms of Ponzi schemes, while the fraudsters are operating under various names and platforms.

He explained that a Ponzi scheme was a fraudulent investment operation where payment to its initial investors was from the payments made by new investors and not from profit earned through legitimate sources.

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