It’s a beautiful sunny day, birds are chirping, cars zooming on the road, and your friend has just told you about Live Auction, the new way to make easy money from the comfort of your house, or is it?
Live Auction claims to be a peer-to-peer online investment platform where members buy and sell shares to make a profit. Shares for which company? Well, these are all virtual shares, imaginary if you may. Actually, Live Auction does compare itself to the world’s most popular cryptocurrency, “just like bitcoin our shares work on demand and supply algorithm, while some are buying, others are selling making it a continuous system with minimal risk”
The online investment platform promises a 30% interest in 4 days, 60% interest in 8 days and 95% interest in 12 days. This means, the more you let your money stay within the system, the more you are supposed to earn. Oh, there’s also a 5% interest for every level of referral that joins under you (we shall address this later on).
How it Works
Once you are registered on Live Auction, users are then required to “bid” an amount of their choice between KES 1,200 and KES 200,000. At this point, you are not going to pay anything, it’s just a show of interest. If your bid goes through, you are paired with an already existing user on the platform, from whom you will get shares.
Here’s where it gets interesting, this user already has shares trading on the platform and these are the shares that have been allocated to you after you bid. To complete the transfer of the shares, you are required to send, via M-PESA, your bid amount to the phone number of the person the system has paired you with. This person then confirms receiving this money through the system and the shares are reflected on your account.
Notice that so far, the platform has not handled any money? It may look like a legitimate way to make money since it gives a sense of security that the platform cannot disappear with your investment but there’s more to it.
The Red Flags
Apart from moving their domain from liveauction.cash to liveauction1.cash after only a few months of operation for unknown reasons, the platform itself has a few red flags that are a telltale sign of things to come:
First, there’s no actual “investment”. The money you bid on the platform is sent to someone else who has chosen to cash out. So where does the platform get money to pay the interest? Essentially, Live Auction users are just moving money around themselves like what a chama would do. However, unlike a legitimate chama, the shares you supposedly get when you win a bid, are nothing but just number on a screen.
Secondly, the platform requires the constant recruitment of new investors for it to actually work as intended. Despite the fact that Live Auction doesn’t put an emphasis on existing members recruiting new ones, the only way for current members to make money is if there’s a demand for their shares which can only be so if there’s a constant supply of new member – characteristics of a pyramid scheme.
Lastly, and the final nail to the coffin, Live Auction was supposedly scheduled for an upgrade on Thursday, 12th November. A system upgrade that was meant to last about 72-hours is yet to be completed. At first, admins were asking for patience from users as they worked to restore the service but things have seemingly taken a turn for the worst with complete silence from all admins.
To top it all up, there are reports from multiple users that before things went south, the last round of paired bids was to the benefit of Live Auction founders. What this means is that “the system” paired would-be investors with the masterminds behind the product, essentially getting the money in the hand of the creators.
As of going to press, Live Auction management was yet to reach back to us on what exactly was happening. The website, liveauction1.cash has also completely gone offline, after intermittent 404 errors since late-night Sunday (15th November).
A number of users have come forward, having lost money that they had invested in the platform, hoping that they would get to cash out big. Reports online and screenshots in our possession show that numerous people had invested funds running from KES 20,000 to hundreds of thousands of shillings.
Like any other pyramid scheme, there are users who joined the platform early and have actually made money from Live Auction. A writer from Kampusville testifies to have made over 50k from his initial 5K investment, he, however, notes that he knew that is was a multi-level marketing platform and thus was cautious with his investment. Unfortunately, this is not the same case with everyone and others had even re-invested their earnings, in the hope of “kuomoka”, with a case of someone waiting to cash out as much as 500K from the platform (according to his screenshots).
Cases of such platforms have been on the rise in Kenya and ironically, there are already Live Auction clones popping up within WhatsApp and Telegram groups, promising to be “more legit”.
Apart from the constant sprouting of pyramid schemes preying on innocent Kenyans, desperate to make it in life, another constant has been the deafening silence from relevant authorities. Apart from sharing tweets and Facebook posts, warning the public on pyramid schemes, we are yet to see the government actively fight to protect its citizens from such scams.
Who shall fight for us?