It always looks too good to be true. You just need to download an app, deposit cryptocurrency, log in for an hour daily, and you will earn a 30% monthly return.
There is more - inviting others into the scheme will get you even more "lucrative" rewards.
Tens of thousands of Bangladeshis believed in this seemingly easy money-making Ponzi scheme by an app named Metaverse Foreign Exchange Group (MTFE). They were already not being able to withdraw their funds for the past two weeks, but on last week, the scheme collapsed and thousands are to lose everything.
But how did MTFE pull off something like this?
Promises of high returns
MTFE attracted many of its users by promising them exceptionally high returns on their investments, such as a 30% monthly return on cryptocurrency deposits.
These promises appealed to individuals seeking quick and substantial profits.
Fabricated investment results
Users were asked to create virtual trading accounts and deposit their cryptocurrency into these accounts. They were then led to believe their funds were being used for actual trading, generating profits within a virtual trading environment.
MTFE also manipulated the results to show users fabricated profits and losses within the virtual trading environment. Users were initially shown positive returns to build trust and encourage them to invest even more.
This fabricated performance gave the illusion that the platform was legitimate and profitable.
"I am now certain that MTFE had been fabricating investment profits or losses," said Moinul Islam, one of the defrauded MTFE users in Dhaka.
"In reality, its virtual trading environment fabricated everything to embezzle our money," he added.
Promise of more for referrals and aggressive recruitment
The Ponzi app MTFE heavily relied on a referral programme to expand its user base. Users were incentivised to invite others to join the platform, and they would receive referral bonuses in return.
This referral-driven approach played a significant role in attracting new participants and increasing investments.
The scheme also employed aggressive recruitment tactics through "team leaders." These leaders aggressively promoted the platform to their followers and friends, contributing to the rapid spread of the scheme.
Using false identity
MTFE presented itself as an unregulated international broker, capitalising on users' trust in the financial industry.
This false identity helped MTFE appear more legitimate, even though it was operating a fraudulent scheme.
MTFE falsely claimed to be registered in Ontario, Canada. However, Ontario Securities Commission's website shows, "Metaverse Foreign Exchange Group Inc, found at www.mtfe.ca, is not registered in Ontario to engage in the business of trading in securities."
The scheme deliberately kept its true location, management team and legal channels hidden. This lack of transparency made it difficult for users to verify the platform's legitimacy and conduct due diligence.
Threats and intimidation
As the scheme started to collapse, MTFE sought additional investments from users to cover losses.
Unidentified agents employed intimidation tactics, threatening legal action against users if they didn't provide more funds, Asadur Rahman, one of the MTFE users in Dhaka, said. He had over a thousand US dollars in his MTFE virtual account, which now shows minus $1,400.
Being cryptic to cover the crime
MTFE directed users to use cryptocurrency for deposits and withdrawals, making it harder to trace those transactions. This added layer of complexity allowed the scheme to operate under the radar.
To build trust, it allowed some users to make small withdrawals initially. This tactic created the illusion of a functioning and profitable platform, encouraging users to invest larger amounts.
MTFE did not operate in Bangladesh only. It expanded its network to Sri Lanka, Nigeria, Pakistan, and India. Users in those countries faced similar predicaments in recent weeks, according to the team leaders.
Moreover, the use of "team leaders" helped create a network effect, where users recruited more participants, thus increasing the overall investment pool.
Overall, MTFE used a combination of promises, manipulation, aggressive recruitment, false identity and lack of transparency to deceive users into investing in their cryptocurrency.
The scheme depended on the continuous flow of new investments to cover earlier investors' returns, following the typical structure of a Ponzi scheme.
As long as new participants kept joining and investing, the scheme appeared to be sustainable.
However, when recruitment slowed, and funds became insufficient to cover returns, the scheme began to collapse, leaving many users with substantial losses.