Cyprus Police headquarters launched an investigation on Wednesday into a suspected pyramid scheme following numerous reports of victims losing substantial sums of money.
Authorities have directed district criminal investigation departments (CIDs) to compile complaints related to the scheme and are urging affected individuals to step forward.
An expert interviewed on CyBC’s morning radio voiced concerns about the investigation’s complexity, highlighting challenges in tracing online transactions, especially those involving cryptocurrencies.
Understanding Pyramid Schemes
A pyramid scheme, also known as a Ponzi or multilevel marketing scheme, can initially appear legitimate. Participants are encouraged to invest at a certain level and are then tasked with recruiting others to join the scheme.
As new recruits join and recruit others themselves, early investors may see returns. However, the scheme is unsustainable as it relies on a constant influx of new participants. Once recruitment stalls, the scheme collapses, leaving later investors at a loss.
Uncovering the Scheme
Reports of the scheme surfaced on social media when participants realized they were unable to retrieve promised returns, and associated websites disappeared from the internet.
Police have received multiple complaints, prompting a comprehensive investigation across the island.
Expert Insight
Online security expert Dinos Pastos, speaking to OmegaTV, described the scheme as a “blatantly obvious” pyramid, emphasizing its reliance on recruitment to generate profits. He noted connections to a similarly named company in the Philippines, where authorities are also investigating the operation’s legality.
Impact on Victims
Victims of pyramid schemes often include friends and family recruited by initial investors who genuinely believe in the scheme’s profitability. This personal connection can deter victims from pursuing legal action against their recruiters.
Ongoing Investigation
Authorities are determining the scope of the scheme’s impact in Cyprus, including the extent of financial losses suffered by victims.
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