Mavrodi, Lord of Cryptocurrency 

Mavrodi, Lord of Cryptocurrency
Sergey Mavrodi is changing the world cryptocurrency market Photo: The CrimeRussia

Sergey Mavrodi, a fatigueless builder of financial pyramids, hasn’t abandoned his specialty even after serving a jail term and continues creating more and more Ponzi schemes. Several years ago, the businessman has turned his attention to the most popular trend of our time – cryptocurrency. With his signature zeal, Mavrodi started exploring and using the new instrument in his machinations. The CrimeRussia found out that activities of the ‘great schemer’ could affect the Bitcoin exchange rate – that has grown almost fourfold in six months. In 2017, Mavrodi has apprehended the upcoming changes at the financial market and decided to transfer his savings to a more perspective area. See details of the complicated interaction between Mavrodi and Bitcoin in our exclusive material.

On a worldwide scale

Well-known in Russia since the 1990s, Sergey Mavrodi has ascended to the worldwide fame in 2015. The CrimeRussia has already covered his past in the fullest detail in one of its earlier publications.

A few years after his release from jail, Mavrodi has launched MMM-2011 that collapsed as early as in May 2012. MMM-2012 had lasted even less. The entrepreneur understood that he can’t ‘milk’ his compatriots as efficiently as he used to in the past anymore and decided to go global by establishing MMM Global. The new project has been launched in various parts of the world: workshops and theme contests were held in Italy, France, U.K., U.S.A., Israel, China, and other African and Asian countries. Expectedly, the system was most successful in the poorest states; however, there were plenty of people eager to make ‘easy money’ among the Westerners as well. Especially taking that MMM proclaims a noble cause – struggle against greedy bankers who have enslaved hard-working folks. In addition, MMM is currently marketed as a ‘global mutual aid fund’.

According to Kommersant, more than 130 million people from 100 countries were members of MMM Global as of the end of 2015. Unfortunately, it is impossible to cite the original source anymore: many MMM web sites are already closed, while the main MMM Global web site shows only a video with enthusiastic members and most of its links are not active. It is even impossible to invest funds into the program. Furthermore, ‘followers’ of Mavrodi have already launched dozens of similar web sites – the businessman angrily condemns them as “swindlers”.

Video: Official warning from Mavrodi (2017)    

Bitcoin empire

While developing his new system, Mavrodi has encountered an inevitable problem: each country had its own financial legislation, currency exchange rate, and other specific features. A unified approach was required to accumulate all the funds in one place. The solution was obvious: cryptocurrency – a universal and, most importantly, absolutely anonymous way to collect money from people.

Mavrodi has turned his attention to Bitcoins long ago. In 2012, the businessman created his own cryptocurrency – MMMcoin – generating interest at the rate of 50% per month. But that project failed: hackers have broken up the web site, thus, putting an end to MMMcoin. 

In late 2013, Mavrodi was already discussing Bitcoin advantages.

Video:  Sergey Mavrodi speaks about Bitcoin cryptocurrency 

In his video message, Mavrodi notes that the main cryptocurrency benefits are the anonymity and absence of links with the emitter. The Head of MMM calls Bitcoins “a breath of fresh air” for everybody. Of course, Mavrodi emphasizes his own important rule by naming the new payment method “the incarnation of his ideas”. 

After realizing the Bitcoin potential, Mavrodi added a new function to MMM web sites enabling the members to participate in the financial pyramid by investing the cryptocurrency. 

Furthermore, the few yet-operational MMM web sites are actively advertising this way to participate in the Ponzi scheme and provide step-by-step instructions: from Bitcoin wallet creation to the money transfer mechanism. 

Interestingly, back in the end of 2014, Mavrodi had attempted to gain support of the world society in the cryptocurrency promotion. On November 13, 2014, MMM Global Community became a ‘silver partner’ of U.S.-based Bitcoin Foundation supervising the development and further promotion of Bitcoins. For mere $1,000 per year, MMM Global had got the right to vote at the election of the Board of Directors of Bitcoin Foundation, possibility to create its own page on the fund’s web site, one free pass, and the right to deliver a speech at Bitcoin 2015 conference. However, the mutually beneficial partnership hadn’t lasted for long: users of the Bitcoin Foundation forum were outraged by its collaboration with a roguish organization having a doubtful reputation. As a result, as early as on November 17, MMM Global ceased to be a partner of the foundation. Creators of Bitcoin Foundation said that they have cancelled the partnership immediately upon becoming aware that MMM Global is a financial pyramid.

Tycoon of a global scale

Surprisingly, but MMM has gained the most success in China – one of the most dynamically developing countries in the world. It is necessary to note that the Chinese authorities are waging a ruthless war against financial pyramids whose creators face death penalty. For instance, 28-year-old U In was executed in 2009 for appropriation of 773 million yuans ($112.8 million). However, the severe punishment does not stop other fraudsters: in 2014, the total amount of money invested into Chinese financial pyramids was $16 billion. In early 2016, Ezubao, the largest online platform in the Chinese history, has been shut down. In 18 months, its creators managed to collect $11 billion from the participants of their Ponzi scheme. After smelling a rat, the architects of the scheme decided to cover things up and buried thousands of accounting books in a hole 6 meters deep. The police have spent an entire day to excavate the books with a backhoe. Ultimately, 21 Ezubao leaders were sentenced to prison terms.


Executed U In

However, the system created by Mavrodi successfully operates in China. According to some information, MMM has been working in the Heavenly Empire since 2015 and continues its expansion: the MMM China web site is operational, while the number of its participants is steadily growing despite the risk of a severe punishment. In fact, Mavrodi does not care of such nuances because he resides in Moscow. 

In October–November 2015, the Bitcoin exchange rate has suddenly risen and its cost exceeded $490. The Financial Times linked it with the activity of the MMM creator in China. According to journalist Izabella Kaminskaya, the mass investments in Bitcoins in China have caused the increase in the cryptocurrency rate. Mavrodi was flattered by such attention and responded to the journalist confirming her theses. To prove his communication with the newspaper, the businessman has recorded a video concluded by his signature slogan: “We Can Do a Lot”. This is how he finishes all conversations with his fans. Mavrodi said that MMM China uses Bitcoins, that the Bitcoin exchange rate has increased due to his actions, and that he may, if wished, cause a drop in the cryptocurrency rate worldwide. When asked how much funds are circulating in MMM China, Mavrodi said that the amount of money in MMM Global is comparable with the turnover of world stock exchanges.

This statement can’t be verified: in most countries, MMM pyramids have already collapsed. In some African countries, systems created by Mavrodi are also near death – for instance, in Nigeria, MMM has suspended operations for a month – allegedly, due to high system load; this is the first indication of the upcoming collapse. 

The CrimeRussia managed to locate an address (1Jjq59ar8biHT4xFdd899vyrT8qFmpZN5o) used by Mavrodi to receive money transfers in Bitcoins. Apparently, somebody just forgot to remove it from one of the numerous MMM web sites. Based on the completed transaction, Mavrodi has received and sent 15 thousand Bitcoins; this is equal to $65 million at the current exchange rate. And this is just a drop in the ocean omitted by somebody.

Cryptocurrency of the future 

To be successful, any swindler must be well-versed in the world trends. Being a successful fraudster, Mavrodi has apprehended the upcoming changes. According to a CrimeRussia source, the MMM creator has accumulated some 200–300 thousand Bitcoins on his account and concluded that the main world cryptocurrency is significantly overvalued. Our source believes that the fair value of Bitcoin is some $3,000 – while its current cost is $4,500. Apparently, Mavrodi is aware of this. The source says that the businessmen is hastily transferring his Bitcoins to invest the funds into another cryptocurrency – Ethereum. 

Western analysts have already noted the huge potential of Ethereum. Die Welt names is “the main competitor to Bitcoin”. The value of the cryptocurrency invented by young developer Vitalik Buterin has skyrocketed by $3,900% since the beginning of the year – from $8 to $320. Experts believe that it is too costly for new players to invest into the expensive Bitcoin, while its main competitor is of the utmost interest for them. In addition, Buterin made Ethereum more technically accessible and flexible in comparison with Bitcoin.


Ethereum creator Vitalik Buterin

The potential of Ethereum may also be illustrated by the long-term partnership agreement signed by Vnesheconombank (VEB), a Russian government-owned development bank, and Ethereum Foundation on August 29. The parties have agreed to develop education programs and train blockchain and cryptocurrency specialists for state corporations and governmental authorities. 

Time will show whether Mavrodi’s investments alter the cryptocurrency market; in the meantime, the CrimeRussia source forecasts an imminent rise in the Ethereum.



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