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Loom, an unlicensed investment program against which the Securities and Exchange Commission (SEC) of Ghana has warned the public against the fact that many people still use it.
Social media platforms, especially WhatsApp and Twitter, have been inundated with conversations about Loom It is a peer-to-peer system that involves inviting people to invest as little as 20 ¢ with the promise of a return eight times greater than its value over a short period.
Links to WhatsApp's "Loomers" groups are shared across social media and new entrants are encouraged to invest amounts ranging from 20 GH ¢ to the badurance that the loss of such a minimal amount would not be fatal.
In certain groups of looms supervised by Online chart [see below]new entrants are also encouraged to recruit as many new investors as possible to ensure the sustainability of the program.
Indeed, the system will probably fail if new investors do not help pay the old ones.
An ordinary Loom pyramid is grouped into four different color levels: purple, blue, orange, and red. Whoever is first to join the group sits at the red level, which is the central level, and receives the payment when the group fills up.
Two people sit at the orange level, while four investors fill the blue level. The purple level takes new participants with eight open places.
Pyramid of loom
Once the eight purple-level seats are filled, the group divides into two parts: investors from the outer levels move to new levels. The new groups of seven investors must then recruit eight new investors to divide the circles back into two other groups.
However, participants are now listed according to who made the payment first. The faster people join and make payments to a central mobile account, the faster the payments to investors. The initial investment is usually made to the group administrator at the top of the list.
However, as with any peer-to-peer investment program, new entrants risk losing their investment when investors begin to dry up and groups take longer to complete. Some network operators who spoke to Graphic Online under the guise of anonymity shared similar fears, but were confident that they would withdraw their money before such a collapse.
An invitation to such a group stressed that it was about team work and not a scam. "Nobody takes your money – we invite all people to support each other and to support each other quickly," he said at the announcement of a welcome message after joining a Loom group.
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