Popular Ponzi scheme, Loom Money Nigeria has crashed and in a bid to retrieve their money, some angry customers have stormed to their office. On arrival to the said Loom’s headquarters in Lagos, they discovered the office have been deserted.
Lagosians storms LOOM headquarters in their numbers as they claim, no staff has been on ground since last week. pic.twitter.com/ZO8A1PkrEO
— Sam Eba (@SamEba_) June 18, 2019
Before the crash of the Ponzi scheme, some Nigerians had already foreseen that something like this is bound to happen, many made references to the great Ponzi scheme of 2017 called MMM and how it left many broke and bankrupt.
Loom has proved that Ponzi’s are not a good way of investing. At the early stage of Loom, Nairametrics had in a report, warned Nigerians of the imminent danger of investing in the fast money making Ponzi scheme.
The Security and Exchange Commission (SEC) also issued a warning to the public, deterring them from putting their money in the scheme. According to Mary Uduk, SEC’s Acting Director General, the Ponzi had no tangible business model as she described the digital venture as a scheme that uses people’s returns to pay for people’s invested funds.
The peer-to-peer pyramid scheme which is patterned similarly as the collapsed MMM is designed in a rotative form in which when a new person is recruited, others are pushed closer to the centre of the circle where they’re promised a payout.
Just like every Ponzi, you pay to get involved, the scheme relies on you to recruit other people, and to part with their money just as you did. It is a cycle, the more people come in, the greater the chances of one cashing out.
Unfortunately, this cycle only benefits the early users as new entrants begin to reduce and sometimes people tend to slow down payment when things begin to go slow, leaving the latter investors to carry the burden of a failed Ponzi scheme.