The head of Russia’s Ministry of Economic Development has compared Bitcoin to the infamous MMM Holdings – a Russian ponzi scheme that aggressively targets South African and other African investors.
Speaking at the Federation Council, Maksim Oreshkin said that there was clear and dangerous theme between the two: being the amount of unqualified investors buying into cryptocurrency, reports CoinTelegraph.
“The fact that we see, for example with Bitcoin, the publicity that goes around with the topic is dangerous for the involvement of citizens who are not qualified investors,” said Oreshkin.
“[This is] because if we look at the dynamics of Bitcoin valuations, it is very similar to the dynamics of the values of MMM shares.”
“There are very high risks for those who invest in it as it’s clear the state will not be able to protect these people – they act absolutely at their own risk. I’m simply calling for everyone to be very careful with this issue.”
In an earlier interview, Oreshkin expressed concerns with how Bitcoin’s price was tied to popular opinion, speculation and hype.
“I think that this topic should now be treated very carefully: it has become very popular; popularity attracts attention; attention drives speculative demand,” Oreshkin stated.
“We see that the volatility that exists here is tens of percent in one direction, tens of percent in the other direction, which is in fact bad for this instrument.”
MMM in South Africa
МММ was a Russian company that perpetrated one of the world’s largest Ponzi schemes of all time during the 1990s, founded by convicted Russian fraudster, Sergey Movrodi.
The scheme, which lost over $10 billion worldwide, later re-opened as “MMM Global” with subsidiaries in over 110 countries. It subsequently became popular in various African countries like South Africa, Nigeria, Zimbabwe, Kenya and Ghana.
In May 2016, the controversial “donation platform” MMM South Africa collapsed and rebooted amid what it called a “media panic”, after several authorities, including the Reserve Bank, investigated the group and warned it showed signs of being a Ponzi scheme.
The scheme’s downfall started with Capitec shutting down accounts linked to those trading on the platform, as the bank’s systems flagged them fradulent activity. As the scheme got more media attention, members pulled out, leading to a crash in the “Movro” currency used to fund it.
The group blamed the collapse of the system on media reports and South African banks, which it alleged had hurt and robbed “millions” of people who were part of the MMM scheme.