The Chinese Government Advises to Keep Away from Mavrodi’s MMM

News and Analysis

According to Chinese online publication Caixin, the government of China advised citizens to avoid an alleged Ponzi scheme led by renowned Russian fraudster Sergei Mavrodi, which has become immensely popular in China.

In the 1990’s, Mavrodi ran MMM, the first financial pyramid in Russia with around 15 million people reached. Later on, he was convicted of and found guilty in fraudulence and sentenced to 4.5 years in prison. Having served his sentence, he launched several companies under the same name of MMM in other countries.

Mavrodi recently claimed he influenced the recent spike in bitcoin exchange rate, as one of his MMM schemes, namely MMM Global (Bitcoin Republic) employs bitcoin. In November, Mavrodi stated that popularity of MMM caused the bitcoin price to rise. However, such statements failed to be justified by any means.

However, it seems that those statements could not escape notice of Chinese and Russian authorities. Oleg Markov, the head of Russian Federal Service of Financial Monitoring, stated that the Chinese MMM would fail and collapse just like it had happened in Russia twenty years ago.

Nevertheless, the statement issued by the Chinese authorities, seems to have come too late, as some MMM investors state their accounts are frozen as of December 25, 2015 without any further notice given.

According to the statement published by the central bank, banking regulator, Ministry of Industry and Information Technology and State Administration for Industry and Commerce, MMM operates illegally, without any license to do so, and thus poses risks to its investors. However, as Mavrodi’s websites are registered beyond China, and and all of its servers also run elsewhere, the Chinese police cannot proceed with investigation.

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