The Securities and Exchange Commission, SEC, has warned Nigerians against an online investment scheme tagged “Loom Money Nigeria,” describing it as a fraud.
Acting Director-General of the commission, Ms. Mary Uduk, sounded the warning at a news conference on Thursday in Abuja.
She disclosed that the scheme targeted young people, luring them to participate in a pyramid model of the Ponzi.
The director-general disclosed that the fraudsters who carry out their illegitimate activities via social media platforms like Facebook and WhatsApp lure people to invest as low as N1, 000 and N13, 000 to get as much as eight times the value of the investment within 48 hours.
She said: “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.
“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.
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“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 DG however, assured that an inter-agency committee, Financial Services Regulation Coordinating Committee, FSRCC, was working on the issue, and that the commission was also collaborating with security agencies to track those promoting the scheme down.
Last month, Daily Mail UK reported that the scheme had resurfaced online all over the world with different names.
In Nigeria, its central name is Loom Money Nigeria with individuals creating their own WhatsApp groups.
