Loom Ponzi Scheme | Everything You Need To Know

Filed in Column, Crime by on May 12, 2019 0 Comments

Loom Ponzi Scheme | Everything You Need To Know

Loom Ponzi Scheme | Everything You Need To Know

A new money-making ponzi scheme Loom Money Nigeria, is LOOMING over social media and targeting young people. Nigerians are signing up for Loom despite past heartbreaks experienced with other Ponzi schemes such as MMM.

Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for early investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers.

Just so you know, a Ponzi scheme according to the US Securities and Exchange Commission, is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.

US Securities and Exchange Commission further reveals that in many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting from a legitimate business.

Two years after the popular Mavrodi Mundial Moneybox (MMM) Ponzi scheme crashed with millions of Naira lost, Nigerians are starting to flood towards Loom, another scheme that promises astonishing returns on investment.

MMM penetrated the Nigerian market in 2015 with over 2 million people signing up for the scheme by the time it crashed in December 2016.

The Loom scheme, which seems even worse than the collapsed MMM, is 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.

The Loom Pyramid Scheme is not new to the world. Last month, Daily Mail UK reported that the scheme has resurfaced online all over the world, with different names such as ‘loom circle’, ‘fractal mandala’ and ‘blessing loom’. In Nigeria, its central name is Loom Money Nigeria with individuals creating their own WhatsApp groups such as Preye Loom, Catherine Loom among others.

How Loom Works

The Loom pyramid is grouped into four colour-coded levels – purple, blue, orange and red. Whoever is the first to sign up for the group sits in the red level, which is the central level, and gets the payout when the group fills up.

Two people sit in the orange level, while four investors fill the blue level. The purple level takes new entrants with eight spots open.

Once the eight spots in the purple level are filled, the group splits into top half and bottom half as the investors in the outer levels move into new levels.

The new groups of seven investors each then have to recruit eight new investors to once again break the circles into another two groups.

Investors are typically invited to join a WhatsApp group and advised to get as many other investors as possible because the scheme only works if it keeps a steady stream of new investors to pay earlier investors.

The more people are recruited into the group, the quicker it breaks and the quicker the payouts are to investors. The initial investment is usually paid to the group admin who sits in the red level.

MMM vs LOOM

Unlike MMM where there is a website, system information and key person – late Sergey Mavrodi as the major promoter, Loom has no major promoter and operate on the social media via closed groups on Facebook and WhatsApp. Its system is also porous as anybody can create a group either on Facebook or WhatsApp, lure people to pay and shut them out afterwards.

Is LOOM Scam

Any organisation and financial scheme without necessary regulatory approval is illegal and can be sanctioned by the government. In Nigeria,

According to the SEC in Nigeria, Ponzi Scheme includes unregistered investments, unlicensed sellers, secretive and complex strategies.

Tags: , , , ,

About the Author ()

Leave a Reply

Your email address will not be published. Required fields are marked *