MMM Republic of Bitcoin
It was reported this week that MMM Republic of Bitcoin, an alleged Ponzi scheme, is closing down. This created some confusion as to whether or not MMM South Africa would be affected or shutting down as well. MMM South Africa is currently being investigated, along with eight other entities, by the National Consumer Commission (NCC) under speculation that it is operating as a Ponzi or pyramid scheme. (For more MMM South Africa, click here and on the investigation, click here)
Last year Justmoney contacted MMM South Africa to try and understand how it works. Following the reports regarding MMM Republic of Bitcoin, we again contacted the local branch for clarification.
Via Facebook, MMM South Africa explained: “In the MMM Community there are many different countries. One of them was the Republic of Bitcoin. It was a ‘synthetic’ country which united participants from many different countries who provided and received help with bitcoins. Sometimes it created confusion for the people, they asked whether they should join the Republic of Bitcoin (RB) or MMM SA, RB or MMM France, etc. We decided to dissolve the Republic of Bitcoin and people will continue to participate in their specific countries. So, those South Africans who participated in the Republic of Bitcoin will be moved to MMM South Africa. And people will be able to continue to participate and will continue to receive help on the South African Platform.”
On 9 April, the MMM Republic of Bitcoin Facebook page had a post explaining the closure of the site. “We regret to inform you that we have to close down the Republic of Bitcoin. It was an experiment, and, unfortunately, it failed. We turned out not to able to pay 100% per month. We can easily pay 30% per month (and we proved it in practice in many countries), but 100% is too much even for us.”
Despite this Facebook referring to ‘paying’ people, MMM South Africa said: “MMM neither receive payment, nor pay the members. MMM is a platform for the exchange of donations where people send money (pay) to each other.”
MMM South Africa explained that rather than monetary payment, people are paid in Mavro, which grows at 30% per month. “Mavro is not an asset or currency, Mavro is a motivation instrument. With Mavro, MMM motivates its members to help each other by providing financial assistance. Because Mavro is not a financial instrument, its growth rate can be easily adjusted to balance PH (providing help, inflow) and GH (getting help, outflow). The flow of provided assistance and assistance received will always be kept in balance.”
Is MMM South Africa it a Ponzi Scheme?
Previously, Justmoney looked into whether or not MMM South Africa could be classified as a pyramid or Ponzi scheme. The NCC investigation points to how others have similar questions about how this website functions.
MMM South Africa stressed to Justmoney that it is not a Ponzi scheme. A Ponzi scheme is a form of investment fraud where investors pay money into a fund that offers high returns, generally older investors are paid out using new investor money. The investors are offered high returns with little or no risk to their investment.
MMM South Africa claim that as they do not offer a guarantee or promise of a monetary return, it cannot be a Ponzi scheme. The website emphasised that people donate money rather than invest it, and said that “MMM does not offer any return or an interest rate.”
Furthermore, MMM South Africa stated: “In South Africa fraud is a common law crime.
The following elements must be present for a crime of fraud to be alleged: misrepresentation, loss and intent. MMM honestly tell people how it really works and do not promise people any return on the investments. As a donation program, how is it possible to lose your donation? In MMM people ask each other to help them. It depends on the members themselves to maintain the continuation of the process of the provision of help to each other.”
While it may not fulfil all the criteria of a Ponzi scheme, it is still unclear whether or not it is a pyramid scheme. In a report, the NCC is said to have made a discovery when investing MMM South Africa, however, it will not be released at this time as the investigation has been handed over to the South African Police Service.