If you’re a Nigerian you should have heard about MMM that recently crashed and ran away with people’s money like millions of Naira.
If you are among those that invested in MMM, you should have known that the company was a scam.
Even though MMM has mmm stock and other business requirements to seem like a real company; the company was in operation of what is called a Ponzi scheme.
MMM was a fraudulent investment operation where the operator, someone or organization, pays returns for the investors for new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.
Operators in MMM Nigeria usually lure new investors through providing higher returns than other investments, in the form of short-term returns which can be either abnormally high or unusually consistent.
MMM Nigeria would have started as a legitimate business, until the business fails to achieve the returns expected by the owners.
The business enterprise then turns to be a Ponzi scheme and it continues under fraudulent terms without letting the general public know exactly what they are doing.
No matter the initial situation, the perpetuation in the high return requires a constantly-increasing flow of money from new investors to sustain the scheme.
Many Nigerians are recent victims of MMM in Nigeria, simply because they’re looking for the fastest way to make money and also failed do a thorough research before diving into the Ponzi scheme.
How Did MMM Get Many Nigerians
Since many Nigerians have given testimonies that mm m really pays people. The general public was putting their hard earned money into the scam without looking back and hoping to make quick money online.
So, how did mmmmmm deceive you? Initially the promoter (MMM) can pay out high returns to attract more investors, and lure current investors into putting in extra cash.
As a result, other investors begin to participate, which leads to a cascade effect. The “return” to the initial investors is paid out of the investments of new entrants, instead of solely from profits.
However, the high returns often encourage investors to leave their money in the scheme, with the result that the promoter won’t have to pay out very much to investors.
MMM simply has to send out statements showing how much they’ve earned. This maintains the deception that the investor’s account is definitely an investment with higher returns.
In addition, MMM Nigeria also tries to minimize withdrawals through providing new offers to investors, often where funds are frozen for a longer period of time, in exchange for higher returns.
The MMM company sees new cash flows as investors are told they cannot transfer money from the first plan to the second.
If a few investors wish to withdraw their funds as per the terms allowed, their requests are generally processed faster, which gives the illusion to many Nigerians or any other investors that the fund is solvent.
In overall, I would say that many people in Nigeria who invested in MMM were not greedy; instead they were desperate to make money fast online.
Since the MMM crashed in Nigeria, a lot of people are now realizing that they were being scammed by the company and failed to read the handwriting on the wall earlier – You should look before you leap!
Why Federal Government Could Not Stop MMM Operation in Nigeria
I know you would be asking why is that the government allowed the operation of MMM in Nigeria. Well, like I said earlier, the business would have started like a genuine business before getting into a Ponzi scheme.
Each time a Ponzi scheme is not stopped by the authorities of the country, at some point the company falls apart for the following reasons:
- The company vanishes, taking all the remaining investment money. This is exactly what happened in Nigeria.
- Since MMM type of scheme requires a continual stream of investments to invest in higher returns, once the investment slows down, the scheme collapses because the company starts having troubles paying the promised returns (the larger the returns, the greater the risk of the Ponzi scheme collapsing). Such liquidity crises often trigger panic, when many people start asking for their money, just like the same way banks operates.
- External market forces, like a sharp decline in the Nigeria economy now (For example, the country’s economy in a big mess due to drop in oil prices. As a result, many investors try to withdraw part or all their money.
To learn more how a Ponzi scheme works, watch the small video below: Good luck trying to get your money back from MMM:)