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Tuesday, Jan 28th

Nigeria: Bitcoin under scrutiny as MMM scheme falters

Nigeria: Bitcoin under scrutiny as MMM scheme falters

Shortly after the MMM pyramid scheme in Nigeria announced the suspension of user accounts on 13 December, the Nigeria Deposit Insurance Commission (NDIC) says it has set up a committee with the Central Bank of Nigeria to review Bitcoin.

The NDIC is saddled with the responsibility of providing a safety net for depositors in Nigeria's newly liberalised banking sector. Together with the apex bank, they had earlier warned Nigerians against their involvement in the Sergey Mavrodi-led scheme which cited an overload of its system due to higher usage at this time of the year for the suspension of an estimated two million accounts.

NDIC's Managing Director, Umaru Ibrahim, told financial correspondents at a recent workshop that their joint study will look at Bitcoin's advantages and disadvantages, what it means for the payment system and what it means for the safety and security of customers.

"We will also look at what it means for money laundering, anti-corruption, crime and measurement of money/near money instrument for the economy," said Ibrahim, adding that the currency has continued to gain recognition as a means of payment.

He also cited the recent addition of an ex-Chief Executive of Barclays PLC, Antony Jenkins, to the board of directors of a London-based startup, Blockchain, which is named after the technology that creates the shared network used to move and track Bitcoin for its over ten million wallet owners.

Ibrahim says more education is required to empower Nigerians with more knowledge of the digital currency, specifically to help them distinguish between Bitcoin and Blockchain technology, as well as between the cryptocurrency and schemes like MMM.

In addition, as Mavrodi stated in an open letter to the Nigerian authorities posted on the MMM Nigeria website on Monday 11 December, relevant Nigerian authorities need to improve their knowledge too:

"You have repeatedly stated that "it should be investigated!.. researched!.." It means you know nothing about this System yet; you even haven't understood how it works. Isn't it completely irresponsible of you to make all these allegations and play with the lives of millions of ordinary people?"

He also denied in the post that MMM is a scam. "What is the scam here, if all members are warned in advance about all the risks, the possible and impossible ones? They know there are no investments at all. The warning is a red text on a yellow background placed on most prominent place of the website."

Though the countdown has so far begun to see if the scheme will resurrect on January 13, 2017 with the savings of the victims, Mavrodi has accused the media of fueling hysteria around MMM and provoking a panic.

MMM was booted out of South Africa last year, and reportedly collapsed a few months ago in Zimbabwe. Now that it seems to be on the verge of exiting Nigeria, reports say it is now headed Kenyans' way.


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