Nigerian Banker Warns on “Ponzi Schemes”

Blockchain, Investing, News, Regulation | April 7, 2017 By:

The Nigeria Deposit Insurance Corporation (NDIC) has warned Nigerians against patronizing various digital and blockchain currencies, characterizing some as “Ponzi schemes.”

Umaru Ibrahim, the managing director of NDIC, gave the warning at the ongoing 2007 Enugu International Trade Fair.

Ibrahim, who was represented by Nicolas Ibrahim, the NDIC Controller at Enugu Zonal Office, said that the warning became necessary to save the investments and money of Nigerians.

“I wish to draw attention to emergence of the various Ponzi schemes, popularly called Mavrodi Mundial Movement (MMM) and other forms of digital and blockchain currencies,” Umaru Ibrahim said. “These Ponzi schemes also came in the form of virtual currencies, such as bitcoin, Ripples, Monero, Litecoin, Dogecoin and Onecoin, for medium of exchange and web-based transactions which are neither authorized by the CBN nor insured by the NDIC.”

The director also warned members of the public against activities of some cooperative societies which had gone beyond their primary mandate of accepting contributions from their registered members. He noted that the cooperative societies were not established to mobilize funds from non-members.

“I wish to emphasize that cooperative societies are established to mobilize savings from their members only. I therefore call on non-members not to patronize them, as they are neither licensed as deposit-taking financial institutions, nor insured by the NDIC,” Umaru Ibrahim said.

Earlier this year, The Nigerian Securities and Exchange Commission issued a statement cautioning citizens from investing in digital tokens such as bitcoin, Onecoin, and Swisscoin. The Nigerian SEC said the public should be aware that these investments are “risky by nature” and some of them are “fraudulent pyramid schemes.”