Aside the undisputable fact that emails and passwords used on Ponzi Schemes could be compromised or sold to criminals out there or used in other places were people reuse passwords, the inclusion of cybertocurrencies will even make the scheme more fraudulent, cyber security expert has warned.
In a series of Tweetchat via @TopeAladenusi, Tope Aladenusi, leader, CyberRisk Services, Deloitte West Africa demystified the cryptocurrencies world, especially as it affects the Nigerian market.
The conversation was the first in a 4-part series that will focus on each key component of the 2017 hosted by hosted by #DeloitteCyberOutlook.
He said, in the cyber world, data is not permanently lost even though it is invisible; however “this action (tweetchat) may minimize the risk”, especially when the participants are educated.
Ponzi schemes will become more fraudulent with the adoption of cryptocurrencies and the economic situation.
He further defined cryptocurrency a digital or virtual currency that uses cryptography for security.
Nigeria CommunicationsWeek recalled that MMM Nigeria, popular Ponzi scheme, announced, recently, the introduction of bitcoin, the world’s best performing currency, as part of its mode of payment in its comeback plans.
Sun reported that the Ponzi scheme, which froze accounts of participants on December 13, 2016, is preparing to return, and it is throwing up a number of plans to get its community active again.
Bitcoin, the increasingly popular cryptocurrency or digital currency, was the best performing currency in 2016, appreciating by more than 100 percent in 2016, from about $400 per bitcoin to over $1,000 per bitcoin.
Prior to the freeze of MMM, participants were allowed to provide help in bitcoin, but they were paid back in naira.
In a statement to participants, MMM said “due to the recent sharp price fluctuations of Bitcoin, MAVRO-BTC is being introduced in the system.
“So far, we have only had Mavro-Naira in the system. Even though you provided help via Bitcoin, your Bitcoins, anyway, were recalculated into the Naira at the exchange rate at the moment of providing help, and you were credited with Mavro-Naira in your PO.
“It was the naira amount that grew. In other words, you received 30 percent a month specifically in naira (not in Bitcoins, although you originally provided help using Bitcoins).
“Now, you have a chance to have 30 percent growth of the Bitcoin amount, not the naira amount. So, acquire MAVRO-BTC which will be credited in your PO and will grow at a 30 percent monthly growth rate.
“In a month not only 30 percent will be added to your initial amount, but, it can increase itself due to Bitcoin price growth.
“And, what if Bitcoin price is going to fall? In case Bitcoin price might go down, you will be able to return to naira at any time — instantly convert your MAVRO-BTC into Mavro-Naira (and vice versa, if Bitcoin price might increase again).
“This option is available in PO. You can convert both confirmed and unconfirmed Mavro.
“We hope that with implementing MAVRO-BTC, your participation in MMM will become more comfortable!”
But, Aladenusi warned that Cyber Ponzi schemes are perpetrated on the internet with a promise of unbelievable financial returns on investment, but it actually generates returns for older investors by acquiring new investors or from re-investors.
The Scheme, he reiterated, relies on a constant flow of new investments to continue. When this flow runs out, d scheme falls apart.
“Several cryptocurrencies exist the most popular being Bitcoin. Some ponzi schemes now utilize Bitcoins which will further disrupt the economy as they are not regulated. Some of these schemes are actually used as bait to advance other types of cyberattacks,” he said.
On the cyber security implications, he said, “Some of the schemes require victims to visit infected websites that can compromise the individuals computer; as a result, systems could be compromised with malware which could affect the user or organization’s data. Cyber Ponzi schemes are addictive & greed may make it continue to be attractive until the user gets seriously hurt”.
He recalled that “In 2016, events occurred as forecasted. There was a twist in cyberattacks; elections were allegedly swayed by hackers. In Nigeria, phishing attacks, hacking competitions and enforcement of cybercrime act were top issues in 2016”
On what happens eventually? Aladenusi predicts “There won’t be enough money to go around, and the scheme unravels. Some Ponzi schemes operate as pyramid schemes, as they use the funds of new investors’ to pay earlier investors. The first Ponzi scheme was orchestrated by Charles Ponzi in 1919 through postal services”.
In 2017, he continued, “We should expect a persistent rise in these cyber Ponzi schemes as the economic recession looms. A lot of Ponzi schemes will also fall in 2017 and people would lose their money. The failure of these Ponzi schemes have led to several negative impacts such as suicide among affected citizens.
The Tweetchat was part of Deloitte’s key forecast and continues till 13 January 2017 before the official release next week #DeloitteCyberOutlook.