The Securities and Exchange Commission (SEC) has expressed concern over the activities of some online scammers, currently running an online investment scheme tagged ‘Loom Money Nigeria’.
The target of Loom Money are young people, which the scheme does through the social media, luring them to participate in a pyramid arrangement.
The acting Director General of the SEC, Ms. Mary Uduk, who warned against falling prey to the scam at a press conference by the Minister of Finance in Abuja, Thursday, said the fraudsters, carry out their illegitimate activities via social media platforms like Facebook and WhatsApp, luring young Nigerians to invest as low as N1,000 and N13,000 and get as much as eight times the value of the investment within 48 hours.
Uduk, who was represented at the press conference by the acting Executive Commissioner, Operations of the SEC, Mr. Isyaku Tilde said the venture is bereft of any 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 low as N1,000 and N13,000 and get as much as eight 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,” the SEC acting DG said.
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.
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 Jack Loom, Catherine Loomamong others.
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