To produce bitcoins, processors must hum away solving mathematical problems. But mavros, another virtual currency, are simpler. They exist because Sergey Mavrodi, their creator, says they do. And while the recent spike in bitcoin value is the result of speculation on the open market, the rate for mavros is “established personally by Mr. Sergey Mavrodi…. twice a week, on Tuesdays and Thursdays.” Their value doubles every month, in fact.
That’s because mavros are actually a pyramid scheme by design, existing only within their own world of what its founders call a “mutual aid fund.” The idea goes something like this: Put your money into the pool so that when somebody needs help, he can draw on the fund. After a gestation period, you can ask for your own money back and whatever else you need.
The company that runs mavros is called Mavrodi Mondial Moneybox, or MMM. It flies under the regulatory radar by claiming to be neither an investment fund nor a business. Instead, MMM calls itself “a voluntary informal network of millions of people across the earth, who rose up against the financial slavery” and “decided to declare war against the Federal Reserve and the bankers.” MMM’s slogans are “We are changing the world!” and “Together we can do a lot!” The company’s disclaimer is particularly colourful:
Participating in the MMM, you are extremely at risk and can lose at any time, all your money.
Do not forget this!
There are no investments! No business activity! There is no company!
In short. We urge you, convince, beg and plead with everyone:
YES YOU DO NOT PARTICIPATE IN THIS MMM!
Yet MMM is spreading. According to the Business Standard, Mavros are winning over India’s small towns. Some 75,000 people have already put their money into the virtual currency, and its website lists a hectic schedule of “seminars” and “workshops” across India almost every day for the next few weeks. Its existing members are almost cult-like in their support. They organise blood-donation drives and rant against detractors on MMM’s Facebook page.
Mavrodi has a colourful history. In the early 1990s, he established a financial pyramid scheme in Russia under the MMM name. In 1994, he was arrested for tax evasion, and MMM found itself unable to repay depositors. The following year, Mavrodi was elected to Russia’s parliament on the promise that he would repay investors with government funds. His parliamentary immunity was soon revoked, and he was eventually arrested again in 2003, serving a four-and-a-half-year prison sentence.
Mavrodi reappeared in 2011 with schemes in India, Indonesia, and Thailand, this time using every loophole in the book, including the use of a virtual currency. Despite that, Mavrodi may be in trouble again. MMM is now the subject of an investigation by the economic offences wing of the Mumbai police.