As I write this article a Bitcoin in Nigeria is trading at $1280 USD (₦404,000), $550 USD more than the price of a Bitcoin in the United States ($730 USD) or a 70% premium. Bitcoin in Nigeria has experienced a rapid surge in pricing characterized by high trading volumes on the Nigerian exchange, BitX.

So why is the price rising?

The Bitcoin press attributes the 70% rise in premium in Nigeria primarily to a lack of liquidity , capital controls and investors’ desire to hedge against financial uncertainty. I, however, suspect that the notorious Ponzi scheme MMM is the root cause of Nigeria’s bitcoin bubble.

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My evidence for this theory are the parallels between what is now happening with MMM Nigeria and what I observed during the rise and fall of MMM Zimbabwe.

The Zimbabwe Case

I use the local exchange BitcoinFundi to remit money to relatives in Zimbabwe. This past July and August—as MMM Zimbabwe peaked in popularity—I could sell bitcoin for up to 25% more than what I paid in the United States. MMM Zimbabwe incentivized people to transact in bitcoin by offering them a 50% monthly interest rate compared to a 30% return when using mainstream channels. Thus, the spike in Zimbabwe’s bitcoin price was probably due to MMM participants who wanted to chase the bitcoin bonus.

A few weeks later, when MMM Zimbabwe collapsed, the price of bitcoin in Zimbabwe briefly dipped below international prices before stabilizing at a 5% to 10% premium.

The selloff was the result of MMM participants who desperately sought to liquidate all investments associated with the scam. These sellers might have thought that bitcoin was under the control of MMM.

However, bitcoin is completely separate from MMM and continues to gain traction around the world. There are now lightly regulated exchanges like BitcoinFundi in many countries, where bitcoin can be legally bought and sold.

Thus, I suspect that the growing ease of converting between bitcoin and forex actually enabled MMM’s overseas operators to externalize value from the scheme. Capital controls make it very difficult to send money out of Zimbabwe and EcoCash only circulates within the country (though there are exceptions).

Contrarily, bitcoin is an internet-based currency which effortlessly crosses borders. I believe that MMM’s operators routed many bitcoin transactions directly to themselves while allowing mobile money and bank transfers within Zimbabwe to keep the system afloat.

The Nigeria Case

The MMM Nigeria case has many parallels to MMM Zimbabwe. Most significantly, bitcoin is at an all-time high in Nigeria at the same time that the popularity of MMM Nigeria’s website surpassed Facebook by some measures. As in Zimbabwe, MMM Nigeria incentivizes participation in bitcoin:

From now on, there is an opportunity for all of the participants of MMM Nigeria to acquire Mavro-50% when you provide help in Bitcoin. Mavro-50% work under the same rules as Mavro-30%. For example, all bonuses are rewarding to them according to the normal procedure.

Where is it headed?

My conclusion is that the soaring price of bitcoin in Nigeria is linked to the peaking popularity of MMM. I suspect that this premium will come crashing down when the pyramid crumbles and participants desperately try to cash out.

Until then, Sergei Mavrodi and his cronies will continue pushing bitcoin to help them siphon money out of the pocketbooks of not only Nigerians but participants around the world. So much money is sloshing around within MMM that sizable returns can probably be generated even if only a small fraction of transactions use bitcoin.

Mobile money and bitcoin are often optimistically touted as forms of “financial inclusion” which help marginalized people access to mainstream banking services or engage the global economy.

MMM’s implementation of both technologies demonstrates that there is much truth in such claims. However, it also demonstrates that financial inclusion can just as easily involve exploitation as empowerment.

William Suk is a PhD candidate at Syracuse University you can contact William via email at: william.suk@gmail.com