The Securities and Exchange Commission (SEC) has raised the
alarm over the activities of some fraudsters currently running an
online investment scheme tagged ‘Loom Money Nigeria’.
Loom Money Nigeria is taking over social media by targeting
young people to participate in a pyramid scheme.
But Acting Director General of the SEC, Ms. Mary Uduk during a
press conference by the Minister of Finance in Abuja, Thursday
warned Nigerians of the fraudulent activities of Loom
promoters.
Uduk, who was represented by Acting Executive Commissioner,
Operations of the SEC, Mr. Isyaku Tilde said the fraudsters carry
out their illegitimate business activities via social media
platforms like Facebook and whatsapp luring young Nigerians to
invest as low as N1000 and N13,000 and get as much as 8 times the
value of the investment in 48 hours.
Uduk said the venture had no tangible business model, describing
it as a Ponzi scheme, where returns would be paid from other
people’s invested funds.
“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 as 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.”
Uduk, therefore, advised the general public to distance
themselves from the scheme, adding, “Please note that anyone that
subscribes to this illegal activity does so at their own risk.”
She also assured that an inter-agency committee, Financial
Services Regulation Coordinating Committee (FSRCC) is working on
the issue, while also collaborating with security agencies to shut
them down.
A Ponzi scheme is an investment fraud that involves the payment
of purported returns to existing investors from funds contributed
by new investors.
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