Over millions of dollars invested on GEMCUE, scam run only in Maldives

The Maldives Police Service on Thursday reported that more than millions of dollars have been invested on the GEMCUE investment Scheme (GMCE) by several Maldivians, with no way of recovering the investments.

Over 40,000 Maldivians had invested on what the police is now calling a classic case of a pyramid scheme.

The Chief Inspector of Police, and head of the Anti-Scam Centre of the Maldives Police Service Adam Naveed in an interview with Sun Online said that though the authority cannot accurately tell how many had invested on the scheme, their investigation into the scam so far has revealed over a million dollars have been invested on it.

He also confirmed identifying seven Maldivians who have been promoting the scam, but added that besides the announcement police made, no other measures have been taken so far to stop it. Naveed further said that no actions have been taken against the seven individuals as well.

Naveed also said that the authority had reason to believe the scam was exclusive to the Maldives, and that the advertisements of the application being operated in various foreign countries was false.

“When we contacted other countries via Interpol, we have been informed that the scheme was not run in those countries,” he added.

He added that the participants of the scam are shown pictures of other participants from other countries, but it was in fact doctored images to generate enthusiasm. Although the scam was not executed outside of the country, Naveed added police suspects involvement of foreign parties.

“None of our investigations into this scam have given us any indication that this was run outside of the Maldives,” Naveed added.

“The entire scheme is run through Telegram, and in these groups, they put up posts indicating the scam was run internationally. But the truth is that this is sham, and a ploy to show investors that scheme had wider international participation.”

Naveed also pointed out that those who are running the scam had also attempted to show the company that owned the application was registered in the US but added that US authorities had confirmed local law enforcement that the registration was not real.

While they cannot tell the exact amount invested, Naveed said that the total amount was at a concerning level.

He further said that out of the wallets to which local investors put funds, two were flagged from Europe but added that there was little hope of finding out whom the wallets belonged to. He further said that since the scam is not executed in these countries, getting their law enforcement authorities to assist would be difficult.

Naveed however, assured they will continue putting efforts to stop the scam.

The Anti-Scam Centre’s head also said that there was little hope of recovering the money invested since the funds were first converted to cryptocurrency before they were deposited into the GMCE application.

“One of the wallets we flagged could not be frozen, but we are continuing with our efforts to stop this and we are seeking support from Interpol as well,” Naveed added.

Most of the funds were transferred to highly encrypted digital wallets, which made tracing the funds and recovering them difficult.

Meanwhile, it has come to light that several people who invested to the scheme were now unable to retrieve their earnings. Many have been complaining about it as well. The app reportedly has deactivated withdrawal option since Wednesday evening.

Since then, many of the investors have formed a separate Telegram group where they have been mounting complaints.

There have been similar other scams run in the Maldives, which usually have the same traits of promising significantly higher returns to investors for relatively no effort. While the earlier batches of investors are able to withdraw their returns, this is only for a while and to attract more investors.

Although Maldives lacks any statutory law addressing digital schemes, the Penal Code contains provisions criminalizing pyramid schemes. However, due to the general nature of the statutory restrictions in the Maldives unlike most developed countries, enforcement measures against such matters are difficult.

Pyramid schemes are fraudulent business practices that rely on recruiting members to generate revenue rather than selling a legitimate product or service. These schemes are characterized by a hierarchical structure where initial participants profit from frees paid by those they recruit with the promise of high returns but are ultimately unsustainable as the scheme expands and reaches to its eventual collapse.