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The Securities and Exchange Commission (SEC) Thursday raised fresh alarm warning the Nigerian public to distance themselves from yet another online fraud presented as investment scheme known as Loom Money Nigeria (LMN).
The regulatory agency made it clear that there seems to be no difference between the failed MMM and LMN as both are deceptive formats to rob people of their hard earned incomes.
The acting Director General of SEC, Ms Mary Uduk, in the warning, made it clear that LMN has virtually hijacked social media by targeting young people to participate in a pyramid scheme that will end up enriching participants which she described as false after all.
Explaining more at a press conference organised by the Minister of Finance in Abuja, Uduk, represented by acting Executive Commissioner, Operations of the SEC, Mr. Isyaku Tilde, revealed that the promoting fraudsters, carry out their illegitimate business activities via social media platforms like Facebook and Whatsapp where they lure unsuspecting young Nigerians 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.
According to SEC, “The venture had no tangible business model, hence it remains a Ponzi scheme, where returns would be paid from other people’s invested funds”.
Recalling that a Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors, SEC averred that “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.
SEC boss hinted further that “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”.
Accordingly, she said “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. ”
On efforts of the Commission to get rid of the financial crime, Uduk 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.
Business Hilights recalls that 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 Loom among others.
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