A spike in the price of the virtual currency bitcoin may be the result of its use by a pyramid Chinese investment scheme run by convicted Russian fraudster Sergei Mavrodi, the Financial Times reported on November 5.
Bitcoin soared to its highest price in over a year on November 4 amid growing Chinese interest in MMM, a "social financial network" run by Mavrodi in China, according to the newspaper. The scheme promises 30% returns per month and runs on bitcoins.
The bitcoin price surged by over 20% to above $490 on Wednesday, the FT said.
Recent days have seen a boom in YouTube testimonials for MMM. Participants receive bonuses for providing such testimonials, according to the FT.
Mavrodi, the mathematician architect of MMM, Russia's first pyramid scheme that scammed millions of people in the early 1990s, was sentenced to 4 1/2 years in prison in Russia for fraud in 2007. He denies that MMM was fraudulent and has since launched similar schemes in Russia and other countries.
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