If you haven’t heard of the MMM Bitcoin scam yet consider yourself lucky, but this Ponzi scheme continues to do the rounds, both in the developing world and first world, to the point where SiliconANGLE’s previous coverage continues to gain traffic as more and more “members” attempt to sign up new users.So what is the MMM Bitcoin scam, which often goes by the name of MMM Global and regional variations such as MMM China?Here’s everything you need to know about the MMM Bitcoin scam.The original MMM was set up by Sergey Mavrodi in 1989 and morphed into a Ponzi scheme in around 1994, primarily based out of Russia.That original version of MMM resulted in Mavrodi, a former Russian parliamentarian, being jailed for fraud for running it.The current MMM Bitcoin version emerged in around 2011 following Mavrodi’s release from prison, and follows the same Ponzi structure as the original.A Ponzi scheme is an illegal investment scheme where the person or organization running it pays returns to existing investors from capital paid into it by new investors, rather than profit actually earned by the company itself.

Typically companies running such schemes offer higher than usual profits.Variations include the High Yield Investment Program (HYIP) which MMM Global falls under, in that it offers particularly high (even for Ponzi scheme) returns, or as the name suggests, a high yield.ethereum miner rigMMM Global/China likes to cloak what it’s offering by saying that it’s not a HYIP scheme, but a “mutual-aid program” where members pay each other … which is really just a fancy way of saying they’re a Ponzi scheme without actually saying so outright.setup bitcoin mining poolThe MMM scam’s mutual-aid program promises a 30 percent monthly return to investors who invest as little as $10, payable only by Bitcoin.explain bitcoin mining like i'm five

A side program call “MMM Extra” offers a full-blown HYIP rate of a staggering 100 percent per month, or a cumulative 409,600 percent per year; if that doesn’t ring alarm bells you probably deserve at this point to lose your money to them.ethereum stock nyseMMM Global/China isn’t simply just your based level Ponzi scheme, at least in its current incarnation, in that it offers both an affiliate scheme and multi-level marketing (MLM) scheme on top of the base offering.bitcoin miner s9With MMM, those who sign up are able to obtain affiliate payments for referrals or for posting positive testimonials online, with users receiving 10 percent from what the company refers to as “all donations of the participants you invited.” A multi-level marketing scheme is a system where a sales force is given a commission not only for sales they generate directly, but a cut of the salespeople they have recruited make as well; while an MLM in and of itself is not illegal (Amway is the most famous MLM of them all) many MLM’s end up being illegal as they rely more on the revenues passed along via the “downline” (the path from original recruiter down multiple levels as people they have signed up sign up others, and so forth, often as far as 10 levels deep) than they do the original product they were allegedly trying to sell.bitcoin futures cme

The MMM MLM involves power users becoming managers who create their own multi-level multi-level structure that offer tiered bonuses from all contributions of the members of their structures, which in this case is their downline.bitcoin atm new yorkMMM claims among other things that it’s not a high-yield investment program (HYIP), and that it is legal, because it is a mutual benefit fund that sees people “help each other for free, and absolutely consciously … transfer money directly to each other, from one bank account to another, without any conditions, guarantees and promises.” This is complete and utter rubbish.bitcoin fedora rpmUltimately the test of any of these sorts of things is whether the company involved is actually offering a product, or simply relying on payments from new investors to fund the returns of existing investors, and that’s exactly what MMM Global does.cnbc bitcoin interview

A Ponzi scheme is most definitely illegal in all Western jurisdictions, and in countries like China is classified as an unlicensed investment organization, which also makes it illegal.The obvious answer is not to invest in a scam like MMM Global to begin with, but lets just say you do, or already have.There’s no clear answer here as it depends on the country you live in; ultimately authorities are primarily going to be interested in those running the scheme versus those sucked into it as investors (potentially victims).However, there is usually a distinct line between those who join, and those who actively recruit.If you are recruiting people to MMM Global/China or any of its similar country based variants, you are promoting an illegal activity and you may well be liable to prosecution.A not to dissimilar Bitcoin-based Ponzi scheme ran through Hong Kong and Taiwan last year and in both countries those promoting it, that is not the founders but those who signed up then tried to sign up others, were arrested over their involvement.

There would be no difference in mainland China, or indeed any western country, should you be involved at this level.If you’ve already invested not knowing what you were getting yourself into, the bad news is that it’s highly unlikely you’ll ever get your money back.However that doesn’t mean that you can’t do anything.Report the scam to local authorities, that may mean local or State police, or even Federal Organizations ranging from the FBI, through to securities bodies such as the Securities and Exchange Commission (SEC) in the U.S., and the Australian Securities and Investment Commission (ASIC) in Australia.You may have lost your money by investing in MMM Global, but that doesn’t mean you can’t help stop others getting caught up in the scam and assist in putting the people running it behind bars, where they deserve to belong.With Bitcoin experiencing rises in value and stories of miners winning big by holding on to their coins, questions about Bitcoin’s security are also popping.

Bitcoin (BTC) has no official regulatory body, never mind a regulatory body devoted to security.What it does have is a number of forum-based vigilantes who dig up the scammers who’d try to fleece you out of that sweet, sweet BTC.Bitcoin is a decentralised, open-source currency.Great for libertarians, for whom words like “decentralisation” and “bit” are catnip.Not so good in that no one seems able or else organised enough to create a centralised regulating body.The lack of which has given Bitcoin a poor image in the mind of many governments, including power economies like China and Korea.The value of Bitcoin has shot up recently, after a brief dip caused by the China announcement, and currently stands at about $1000 per Bitcoin, or £610.That’s a quadruple increase in market price in USD over a couple of weeks.The number of transactions have also increased dramatically.Some people aren’t so impressed with the numbers.During the LeWeb conference in Paris this week, PayPal president David Marcus – who took up the role during the highest point of media interest in Bitcoin in 2012 – didn’t speak highly of the coinage.

He said its notorious “volatility” as a currency needed to go down before the company would take a look at it.Interestingly, he also said he wanted to see an improved regulatory framework, apparently nervous that Bitcoin currently lay in a “Wild West” populated by programmers and wayward IT technicians.The increase in value of Bitcoin means that those who hoarded the currency during the initial rush, or bought BTCs with real money during one of its waning periods, are earning a small fortune.And where there’s fortune, there are thieves.Robbing a man of his Bitcoins is not an easy avocation.Bitcoins began because they are cryptic: a Bitcoin is covered in ciphers to deter thieves.In fact, that’s one of the main reasons a currency like this could thrive.Better yet: Bitcoins aren’t as anonymous as a thief might hope.Every transaction, while it does not contain a first and last name like a credit card or Paypal payment, does get stored on what’s called a block chain.The chain remembers every transaction a coin has undergone, as well as how many Bitcoins were held in each new wallet.

This can give security forces a lead on the robber.This means that the Bitcoin phishing scammers and wallet stealers can only go so far; even if they’re successful in breaking into a transaction and robbing a poor miner, they’ve left a trail of block chain breadcrumbs to lead police officers to them.But, before you jump on the bandwagon, there are, of course, “methods” that don’t involve cracking ciphers and breaking down firewalls.That Bitcoin appears to have secure transfer really should be a given before it is a legitimate currency, not a reason for celebration.If we’re looking at a digital currency which, actually, only differs from typical currency in its violent price swings, we might as well just play the stockmarket.Or worse: appreciate that it is just a novelty for the already overburdened brogrammers.Bitcoin needs to prove it’s above expert hackers and even the foibles of careless people to be worthwhile. is a betting site for Bitcoins.It describes itself as a “provably fair gaming site”, which is an admission to having come under a lot of controversy.

This admission became extraordinarily relevant when, in September this year, a person by the name of Nakowa won big on the site.After a somewhat lousy beginning, Nakowa toppled records by winning almost 11,000 Bitcoins ($1.3 million, almost £800,000).The above video shows Just-Dice player Nakowa on his winning streak.It seemed like an almost “supernatural” (according to one onlooker) turn of fortune.He began on a massive losing streak, which proved a boon for Just-Dice.But suddenly he started winning – and over the next few days, that streak didn’t stop.Eventually he pushed Just-Dice $2,000 into debt from his good gambling.It wasn’t long before alarm bells started ringing.It’s worth noting right now that nothing about Nakowa has proved he won by cheating.But the remarkable and consistent luck he had suggests foul play.The “provably” fair part of Just-Dice’s lead-in is the transparency of its gambling algorithms.But it only proves that the site can’t cheat gamblers out of Bitcoins: it can still cheat the other group of Just-Dice players, the investors.

Nakowa could’ve been a disgruntled employee or (more cynically) an employee with the specific task of bleeding clients dry.Alternatively, Nakowa himself claimed to have found patterns in the win/lose sequences during gambling and exploited them.The owner – the allegedly incompetent “Dooglus”, who accidentally misappropriated $120,000 in Bitcoins – says this is untrue.But Nakowa’s been back, and his winning streak continued.A Bitcoin is covered in ciphers to deter thieves.That is, however, until it didn’t.Nakowa posted on the Bitcointalk forums that “I was beaten”, and that he’d lost 5,000 Bitcoins in one day.Which seems a little strange, given his ongoing winning streak.And especially so given his following disappearance from JD.Finally, he describes in the same post altercations between him and the owner “Doog”, who was furious with the website’s losses.There are two main lessons this story gives us.Firstly, this could only be sorted out between the two men, as there exists no rules for this sort of thing, and no one to enforce them if there were.

Secondly, there’s a lot of confusion here.As Bitcoin Investment Trust general manager David Kintisky said: “You have to figure out how to buy it, then you have to figure out how to hold it.Explain it to your compliance guys how it all works, and then find a way to report it on your taxes.” In sum, there’s a lot of balls in the air.It isn’t as simple as the transaction alone.Kintisky’s point also lends itself to another confusion with Bitcoins – third-party legitimacy.Companies like JD spring up all the time, and there are dozens of Bitcoin gambling sites in operation.These companies rise and fall according to the gossip of Bitcoin users, who can sometimes be too trusting of the currency – believing it to be the revolution it isn’t.In what has since been called the “BDT fiasco”, the same sort of optimism ended up taking hundreds of thousands of pounds of Bitcoins from optimistic investors.BDT stands for “Bitdaytrade”, a website for leveraged speculation on the fluctuations in BTC market price.

It came along after its predecessor, Bitcoinica, had been hacked: 43,000 Bitcoins were stolen (which would now be worth $43 million).BDT was started by Alberto Armandi.Little is known about him, although since the fiasco it has become apparent this was not his first scam.The ploy was simple: he asked people to buy shares in his company using BTC.He promised to use the interest from that money to eventually buy back the shares at 120% of the original cost.The interest was meant to come in at 156% APR: everyone would be rich.It was too good to be true.There were some hacks – later revealed to be staged – and Armandi disappeared.What followed was an awkward silence online as investors realised they had been scammed.His PR guy, Medi, took the fall, but in now way could make up the more than 10,000 BTCs that had been stolen.But the saving grace of Armandi’s scam was that he, as a scammer, was horribly ineffective.First of all: everyone knew his name.Which meant that a Google search could bring up his LinkedIn and Twitter profiles.

Finding this guy and slapping a big “Fraud” label on him was easy.Alberto was forced to buy back as many bonds as he was able to with the money he had remaining or face prison.It is unknown to what extent he had to go to do that: or whether everyone received their money in the end.There’s more than a few wrinkles for Bitcoin to resolve in the future.None of these incidents – the big ones and then the peppering of little events that occurred within them – would have been quite as damaging if there had been any external body to step in.Luckily, and surprisingly, Armandi was breaching the law in misleading people into giving him currency which is only just five years old.And it looks as though Nakowa had to give back some of his money to prevent a full-blown investigation.Both parties, it seems, have made away with hundreds of thousands of dollars in Bitcoin.Bitcoin has got a way to go until it’s a safe trading medium.Until then: hide your Bitcoins, hide your data files, and hide your hard-drives too, because they are robbing everybody.