The Securities and Exchange Commission (SEC) has warned Nigerians against participating in a new Ponzi scheme called Loom.
Interestingly Nigerians have taken on this new craze even after losing millions in the last Ponzi scheme -Mavrodi Mundial Moneybox (MMM).
Loom is a peer-to-peer pyramid scheme which involves people being invited to invest as little as N1000, or N2000, or N13,000 and get as much as eight times its value within a short period of time. It markets aggressively on WhatsApp and Facebook.
The warning from SEC was made at a press conference in Abuja on Thursday, May 16, 2019, by the Acting Executive Commissioner (Operations), Isyaku Tilde. He warned the public against investing in the scheme which is not registered with the commission and has no established structures.
According to him, “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 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.
“Please note that anyone that subscribes to this illegal activity does so at their own risk.”
The SEC disclosed that the Financial Services Regulation Coordinating Committee (FSRCC) is making efforts to shut down the scheme.
The Loom craze is also sweeping the internet and targeting youths globally.
