An investigation of MMM Ponzi scheme on Bitcoin
Year: 2019
Type: preprint
Abstract: Cybercriminals exploit cryptocurrencies, such as Bitcoin, to carry outvarious illicit activities. In this paper, we focus on Ponzi schemes that
operate on Bitcoin and perform an in-depth analysis of MMM, one of the oldest
and most popular Ponzi schemes. Based on 423K transactions involving 16K
addresses, we show that: (1) Starting Sep 2014, the scheme goes through three
phases over three years. At its peak, MMM circulated more than 150M dollars a
day, after which it collapsed by the end of Jun 2016. (2) There is a high
income inequality among MMM members, with the daily Gini index reaching more
than 0.9. The scheme also exhibits a zero-sum investment model, in which one
member's loss is another member's gain. The percentage of victims who never
made any profit has grown from 0% to 41% in five months, during which the
top-earning scammer has made 765K dollars in profit. (3) The scheme has a
global reach with 80 different member countries, but a highly-asymmetrical flow
of money between them. While India and Indonesia have the largest pairwise flow
in MMM, members in Indonesia have received 12x more money than they have sent
to their counterparts in India.
Source: arXiv (Cornell University)
Language: English
Subfield: Law
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2982692499