The Securities and Exchange Commission has sternly warned Nigerians against participating in the trending online investment scheme tagged “Loom Money Nigeria.’’
The warning was given by Mary Uduk, acting director-general of the commission, at a news conference in Abuja on Thursday.
According to Efe Ebelo, SEC’s head of media, Uduk, who was represented by Isyaku Tilde, acting executive commissioner, operations of SEC, said Loom Money Nigeria had taken over the social media.
The director-general revealed further that the scheme tried to get young people to participate in this pyramid model of the Ponzi and that those behind it “carry out their illegitimate activities” via social media platforms like Facebook and WhatsApp.
A Ponzi scheme is an investment fraud that involves the paying returns to existing investors using from funds contributed by new investors.
The scheme lures young people to invest as low as N1,000 and N13,000 and to get as much as eight times the value of the investment in 48 hours.
“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,” she said.
“They 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.”
As a result, Uduk warned Nigerians to stay far away from the scheme, else they do so at their own risk.
She said an inter-agency committee, financial services regulation coordinating committee, was working on the issue, and that the commission was also collaborating with security agencies to track them down.
Interestingly, Nigeria isn’t the only country where Loom Pyramid Scheme exists — In the UK for instance, there were reports last month that the scheme resurfaced online all over the world, with different names such as ‘loom circle’, ‘fractal mandala’ and ‘blessing loom.’
However in Nigeria, its central name is Loom Money Nigeria but individuals create their own groups such as Amaka Loom, Bode Loom on WhatsApp.