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Pyramid Scheme MMM Kenya Collapses as Founder Mavrodi Dies

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MMM Kenya

MMM Kenya, a local affiliate of MMM Global, is in a limbo after the death of its founder Sergey Mavrodi. Mavrodi, who had been operating the dubious money doubling scheme online, reportedly passed away after a heart attack last Sunday, leaving thousands of his victims with worthless “mavros” and hundreds of millions of shillings lost.

Although the MMM pyramid scheme had already crumbled in countries such as Nigeria and South Africa, MMM Kenya continued its operations enticing thousands of people to pay money to strangers they interacted with online.

The Man: Sergey Mavrodi

Mavrodi was a renowned Russian fraudster who was found guilty in 2007 of swindling money from 10,000 Russian investors who lost more than $4 million and was sentenced to 4.5 years in prison. After his release in 2011, the MMM Ponzi scheme resurfaced only that now Mavrodi’s target market became the African continent. In 2015, MMM South Africa was established, promising participants a 30 percent return on their investment and bitcoin became the payment option of choice for the scheme.

The Ponzi scheme would later in 2016 spread to other African countries such as Kenya, Ghana, Nigeria and Zimbabwe.

Media reports say that the 62-year old died of a heart attack after a short complaint of chest pain and weakness. Moskovsky Komsomolets, a Moscow newspaper reported that “Mavrodi was hospitalised in the 67th City Hospital. He could not be saved – he died this morning.”

According to a statement on their website, MMM Kenya administrators said “they have put the Internet-based infrastructure on “pause” mode, leaving all those in possession of “mavros” – the pseudo-currency sold by Mavrodi – unable to do anything with it. As such, those with money in the pyramid scheme will be unable to withdraw anything. The statement went on to say: “In the near future, the administration will take a decision concerning MMM’s future and report on it officially.”

MMM Kenya Membership

The common question that was asked of any new recruit interested in the pyramid scheme was: “How much money do you need to be absolutely happy?” MMM Kenya has recruiting agents who would then entice the new members into meetings and ask them to sign up so as to get financial assistance from other new members. The new recruits would then be asked to donate money to the “needy” – the older members – and, in turn, they would earn points in MMM’s (fictitious) digital currency. In the scheme, the more a person gave or the more an old member convinced new members to join, the more points – known as mavros – they earned which they could end up withdrawing as money.

According to the Daily Nation, those investing in the Ponzi scheme were also promised a 30 percent return on their investment and higher returns if they helped members within the scheme that needed financial aid. And the only way that MMM Kenya would survive is if more members signed up. If there is an imbalance between the number of new recruits and those seeking financial aid, the scheme would collapse. This was the case in Nigeria when the number of those seeking help surpassed that of those donating.

CBK Warning

The indefinite “pause” of the MMM Kenya operations comes two months after Patrick Njoroge, the Central Bank of Kenya Governor issued a warning to those investing in digital currencies like bitcoin and Mavrodi’s Mavros that it was a bubble and they should be ready to lose all their money.

The CBK notwithstanding, the operations of MMM in Kenya continued with thousands falling victim to the scheme with a promise of getting high returns on their investment. As Kenyans who have invested in the pyramid scheme await for a way forward from the company, it is only a matter of time before they can start counting their losses.

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BitMari Conducts First Test Remittance on the Bitcoin Lightning Network

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BitMari Bitcoin Lightening Network

Zimbabwean startup BitMari has managed to successfully conduct its first Bitcoin Lightning Network test transaction with Tanjalo, a bitcoin startup from Lagos, Nigeria. The transaction signals a shift for remittances in Africa as users can soon expect almost instant low-cost bitcoin remittances.

Fast Transactions, Low Fees

BitMari is a Zimbabwe-based bitcoin company that leverages blockchain technology to expand into new remittance markets for the African diaspora. The startup was founded in 2015 by Sinclair Skinner and Christopher Mapondera to address the challenges faced by Zimbabweans when sending money overseas and vice-versa. In 2017, the company made history by becoming the first bitcoin enterprise to receive a money transfer license from the Reserve Bank of Zimbabwe. The company also formed a strategic partnership with Agribank to handle remittances for their customers using bitcoin.

Tim Akinbo, the co-founder and CTO of Tanjalo, was able to transfer $15 from Nigeria to a recipient in Zimbabwe through the BitMari platform using bitcoin. He believes the almost instantaneous money transfer will be instrumental in transferring value and promote cohesion by bridging local communities. The company is excited about the new development especially after successfully setting up the Lightning nodes.

Skinner, who is an ardent supporter of the adoption of bitcoin and blockchain technology in Africa to solve everyday challenges, stated:

“BitMari’s quick adoption of Lightning is active use of Bitcoin and Blockchain technology to solve real World challenges facing Africans on the continent and in the diaspora; such as costly remittance fees.”

The Bitcoin Lightning Network

The Bitcoin Lightning Network (LN) is a system built on top of bitcoin that enables people to send and receive payments instantly, and lower transaction costs by bypassing the blockchain. The Lightning Network’s use of payment channels lets users transact with each other directly without having to broadcast their business to the entire network. Currently, the Lightning Network is growing after being launched a short while ago on main-net by the Lightning Labs team.

BitHub Africa, a Nairobi-based blockchain accelerator of which BitMari is a member, has published a guide on how someone can go about setting up a Bitcoin Lightning Node on a cheap computing device called Raspberry Pi. The device can be used to process transactions by anyone with the resources and skills to host the node.

For now, BitMari is searching for other Lightning nodes to connect to their own. The company is also focusing on improving its user experience to increase adoption of its services and pass on the benefits of fast and affordable remittances to its customers.

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Coinfest Nigeria Highlights Blockchain Use Cases Beyond Simply Investing in Bitcoin

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Coinfest Nigeria

The “decentralised convention for decentralised currency” CoinFest Nigeria was held on April 5, 2018, in Abuja. Crypto-enthusiasts, blockchain entrepreneurs, and investors came to together to discuss the future of cryptocurrency and the blockchain in Nigeria.

Coinfest is an annual event held in many countries, including Nigeria, which aims to promote the use of digital currencies and blockchain technology through a collaborative initiative.

Despite the recent drop in the cryptocurrency market and increased regulatory scrutiny for cryptocurrencies, Coinfest NG still experienced a strong turnout with over 150 participants coming from within Nigeria as well as other West African nations.

The event’s keynote speaker, Dr. Andrew S. Nevin, said in his presentation that there is a need for more Africans to see blockchain technology beyond bitcoin, highlighting this as one of the reasons why most African ICOs have failed.

“Despite raising billions, 46% of ICOs have failed globally, and the majority of African ICOs have failed. Only SureRemit and a few others were successful. Yet about NGN32 billion worth of bitcoin have been traded in Nigeria.”

Steemit in Nigeria

One of the many topics discussed at the conference was the fast rate at which the Steemit community is growing in Nigeria. Mr. Toju Kaka talked about building a blockchain community through Steemit. He described the blockchain-powered social network as the Telsa of social media, adding that the platform will be a vehicle that will drive cryptocurrency adoption across the world.

Mr. Toju also described how many microbloggers in the country are now leveraging the Steemit platform as means of making money online through posting valuable content. He further went on to say some Steemians are already building hubs in Nigeria.

“As am talking to you right now, there are crypto-enthusiast who have taken it upon themselves to create hubs in some part of the countries like Ibadan, Portharcourt, and Uyo to power Steemians,” Toju said.

AgroPlexi Aims to Provide Financial Inclusion to Nigerian Farmers

One of the interesting startups showcased at Coinfest NG was AgroPlexi, a new platform leveraging blockchain technology to provide financial inclusion in the Agriculture sector.

The founder of Agroplexi, Mr. Ogundele Mayowa, said that one of the major problems of most African farmers is access to funding. Many of them are unbanked and do not have the necessary criteria to qualify for bank loans. This is where AgroPlexi wants to help.

“Here in Nigeria many of us look at the trading aspect, how we can make money from it. But cryptocurrency and blockchain technology is more than just money it’s the future. Agroplexi already has 51,000 farmers in her database and still counting.”

Mayowa concluded by saying that blockchain and cryptocurrency have the potential to solve the problems surrounding poverty and democracy in Africa.

Nigerian blockchain thought leader, Lucky Uwakwe, also spoke at the conference and told participants: “Experts used to say that it takes a good ten years for software to get into the limelight. That is to tell you that if bitcoin can keep on the pace at which it’s growing, in the next two years it will surely dominate the world as PayPal does.”

Coinfest 2018 showcased a wide range of startups, such as Xenderbit, Bitmama, and BeepMagnet, which are a testament to Nigeria and West Africa’s growing blockchain startup scene.

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Nigerian Bitcoin Scam Disappears With Victims’ Funds

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nigerian bitcoin scam

More than 1000 investors stormed the offices of a bitcoin trading company in Calabar, Nigeria last week only to discover that the proprietors had disappeared with their money. The company, which was offering 30 percent interest after a week of trading, stole millions of Naira after about two months of operations.

A customer who had invested ₦5 million said:

“I saw people collecting 30 percent interest after one week that is why I also put in money. A huge part of the money I put in was even borrowed”.

Members of the National Youth Service Corps (NYSC) also reportedly invested their money in the company. One of the members said she invested ₦1.5 million which was her life’s savings while another stated: “That money was all [I had saved during my service year]. This is painful, I thought I could do business and help myself and my poor family.”

The frustrated victims, realising that their investments were irrecoverable, took whatever items they could find in the company’s offices at the Bassey Duke shopping mall hoping to compensate themselves. Furthermore, the angry crowd caused such a ruckus that law enforcement officers were forced to fire warning shots in the air to control the situation.

“The crowd you are seeing today are just a few that have come to get their money. They made millions and disappeared with our money. I don’t know why we would never learn. MMM and the likes that promise quick profit have duped us in the past, yet we keep falling for them, including me. I put in ₦500, 000 into this one and now see my money has gone down the drain,” one of the victims said.

In light of the collapse of bitcoin pyramid scheme MMM in both Nigeria and Kenya, it is surprising that these type of bitcoin scams are still able to attract and finally harm “investors”. It is, therefore, important to highlight that you should never invest cryptocurrency in “investment schemes” that promise high returns in a short period of time as they are guaranteed to be scams.

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