Bitcoin based frauds and Ponzi schemes are dime a dozen. Sometimes people realize that a bit too late, after investing more than they can afford to lose in such attractive scheme. The Chinese government has recently issued a warning about one such possible scheme currently gaining traction in the country.
On January 18th, the Chinese government has asked its citizen to refrain from investing in MMM-China, a well known bitcoin investment scheme. The warning states that platforms like MMM-China claim to offer/facilitate financial mutual assistance and promise huge returns in order to encourage investments. In addition, those who have already invested will be encouraged to get more investors on board through referral in order to gain rewards for each such successful referral.
MMM-China was started by a Russian named Sergei Mavrodi who was once convicted for fraud by the Russian Courts for operating MMM in Russia which turned out to be a Ponzi Scheme. He served 4 and half years in prison for his actions. Soon after his release Sergei Mavrodi started operating similar investment programs under the same name in various countries across the world.
The Chinese government’s statement states that MMM-China is one of the many unlicensed investment platforms operating in the country, attracting online investors by promising them great returns. These investment schemes have all the characteristics of a Ponzi Scheme. These schemes are not sustainable on a long run and they present huge investment risks. Investors stand a chance of losing their investments once the flow of capital into the scheme dries up.
According to media reports, MMM–China may have over one million Chinese investors on board at the moment. Some of the investors claim that their accounts on MMM-China have been frozen for close to a month now.
The official warning against MMM-China might have come late as it has been months since MMM-China started operating in the country. There have been multiple reports on various online channels about MMM’s history and potential risks since the investment platform started operating in the country.