The Securities and Exchange Commission (SEC) yesterday warned Nigerians against the activities of some fraudsters running an online investment scheme tagged ‘Loom Money Nigeria’.
It said Loom Money Nigeria is taking over the social media by targeting young people to participate in a pyramid scheme.
SEC Acting Director-General Mary Uduk issued the warning during a press conference by the Minister of Finance in Abuja.
Represented by Acting Executive Commissioner (Operations) at SEC, Mr. Isyaku Tilde, she said the fraudsters carry out their illegitimate business on social media platforms, such as Facebook and WhatsApp, luring young Nigerians to invest as low as N1000 and N13,000 and get as much as eight times the value of their investments 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 low N1000 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.”
Uduk 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 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.