Velox 10 Global, a bitcoin pyramid scheme operating in Kenya has reportedly closed shop with hundreds of millions of shillings belonging to its customers.
Launched in September 2017, the company founded by Brazilian, Ricardo Rocha promised ‘investors’ earnings up to $4,000 in daily dividends.
This was after potential investors paid a Sh10,000 ($100) membership fee, and upgraded with an additional Sh20,000 ($200) to earn higher benefits.
According to a report by Nairobi News, biggest investors were also promised mouthwatering benefits that included a 5-day trip to the United Arab Emirates to meet top global business gurus.
The report said even though authorities, including the then Central Bank of Kenya Governor Njuguna Ndung’u, had earlier warned Kenyans about investing in cryptocurrency, most apparently did not heed the warning.
A businesswoman, Esther Muthoni had invested Sh3.2 million ($32,000). Investors were promised up to 50% returns on investment and more if they referred family and friends.
Esther had introduced her friend who invested Sh550,000 ($5,500). Both, with countless other investors never recovered their investments.
This sad tale is similar and reminiscent of the 2016 Nigerian experience. At the time, revived Russian pyramid scheme Mavrodi Mondial Movement (MMM) held Nigerians hostage and later closed shops with millions of investor money.
Suggested Read; MMM sends beneficiaries into panic mode as accounts are frozen
Like Kenya, Nigerian authorities and regulators had sent out multiple warnings about investing in shady cryptocurrency schemes.
A Nigerian bank had even explicitly sent out a warning to its customers, yet all these warnings were not heeded.
Pyramid schemes recruit members and promise them huge profits and payments for recruiting others without any investments or products. This chain continues until it is no more sustainable and then the company usually leaves with money from recruits that have not cashed out.
With the advent of new technology, cryptocurrencies; including and most especially bitcoin, have been used as a tool to spice these schemes.
The websites of Velox 10 Global had also been taken offline without any traces and Nairobi News says investigations are still on.
Nigerian startups raised $17.6m in Q1 2019, 8.5% higher than they did in Q1 2018. Find out more in the latest quarterly edition of the Nigerian Startup Funding Report here.