It was disclosed that those behind it "carry out their illegitimate activities" via social media platforms like Facebook and WhatsApp.
The Securities and Exchange Commission has warned Nigerians against “fraudsters” currently running an online investment scheme tagged “Loom Money Nigeria.’’
Mary Uduk, acting director-general of the commission, gave the warning at a news conference in Abuja on Thursday.
In a statement, Efe Ebelo, SEC’s head of media, said Uduk, who was represented by Isyaku Tilde, acting executive commissioner, operations of SEC, said Loom Money Nigeria had taken over the social media.
She said the scheme targeted young people, luring them to participate in a pyramid model of the Ponzi.
The director-general disclosed that those behind it “carry out their illegitimate activities” via social media platforms like Facebook and WhatsApp.
She added that they lure young Nigerians 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.
Uduk said the venture is a Ponzi scheme, where returns would be paid from other people invested funds, adding that it had no tangible business model.
“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.”
Uduk, therefore, advised the public to distance themselves from the scheme, adding that anyone that subscribed to the illegal activity did so at his 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.
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.
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.