E-creator was not the first wide-scale Ponzi scheme to enter the borders of Zimbabwe but it was much more well-thought-out than the last one, MMM if you had already forgotten. E-creator crafted a convincing story that they are “an e-commerce company focused on the global internet” and for credibility, they put a face to the scheme and had appearances on mainstream media primarily focusing on the big return on investments if you are to invest in it. Boy oh boy did it work! Now thanks to some sources we got an inside look into how it worked. The mechanics of it. It may get technical in some places but bear with me. You can click here to watch the video with all the vivid animations.
The facade that is the e-commerce shop.
The e-commerce shop was being pushed as an e-commerce opportunity for members. Lazada and Zalando are online stores where e-creator members post reviews on products they never used. A common practice with e-commerce stores and some individual sellers. There is a market for posting fake reviews where a seller will offer a rate payment for reviews of their products online.
It’s quite interesting that no authority questioned the legality of posting reviews of products one has not used before. Regardless, that was all just a facade, the real money was being made in the so-called investments.
The system was layered and comprised of different classes of participants. Right at the bottom are the funders of the system: the investors, the managers, and any individual who had an account with E-Creator and was actively making deposits and withdrawals.
Then there were facilitators, EcoCash agents who withdrew large sums of money from the E-Creator system for the individuals at the top of the scheme.
Then of course, the guys at the top of the system who were not residing in Zimbabwe (Thomas) who would receive money siphoned from the system as bitcoin which according to our sources, was not Zhao. But Zhao’s part of the system was pretty significant.
For it all to work, there were 3 key parts of the system.
- There needed to be a steady inflow of cash that was greater than the outflow to extend the scheme for as long as possible.
- There needed to be an efficient system to manage the flow of cash, investor’s balances, and profits and withdrawal requests.
- The amount of money being siphoned out of the system needed to be managed. Take more out of the system than the net deposits into the system and the whole thing collapses prematurely…because no Ponzi scheme lasts forever.
Mainstream media did a lot of work for the 1st part of the system. It got many people to believe E-Creator was legitimate and this then secured a healthy stream of depositors (investors) into the system. So healthy in fact that they had to open branches in several towns and cities across the country.
Managing the cash flow
The second part is where Zhao comes in. Zhao was the manager of the operation on the ground. He was the one monitoring the system and communicating the updates with Thomas who is said to have been residing outside of Zim.
It is said that E-Creator was making use of simboxes, devices that can accommodate multiple sim cards and run them all at the same time. The number of Econet sim cards in use by E-Creator exceeded 200 with each one of them having an EcoCash account attached to it. These are the accounts that were used to receive money from all E-Creator investors, to fulfill withdrawal requests from said investors, and of course, accounts that Thomas was siphoning money from.
Moving the loot from Zim to Thomas
Since the brainchild of E-Creator, Thomas was said to be residing outside of Zimbabwe, the easiest way to get their loot under the radar was through cryptocurrency. According to our source, they would, with the help of some EcoCash agents, transfer large amounts of USD from E-Creator’s EcoCash accounts to EcoCash wallets of cryptocurrency traders in Zimbabwe. The USD would be converted to cryptocurrency and deposited into the cryptocurrency wallet of this alleged Thomas.
Greed killed it prematurely
It all fell apart when Zhao got greedy, according to our sources, and made a mass withdrawal beyond what the deposits into the system could handle. A claimed US$1 million from what Thomas posted.
It produced a domino effect where withdrawals now took longer than usual to get approved. With some time the system would have eventually stabilized. However, the volume of withdrawal requests started ballooning as more and more investors became uneasy and impatient. This further lengthened the waiting period.
Around that time, a statement was issued by E-Creator claiming they were running a scheduled system upgrade with the whole thing coming undone just a few days later when another announcement was made that Zhao was trying to leave with people’s (E-Creator’s) money.
And that is what we believe, from the sources we spoke to, is how E-Creator worked. A very organized system where money went into it, a bit was creamed off the top and the balance was left in the system to keep it going and attract new investors to put more money into it.
What if Zhao had not been greedy?
This Ponzi scheme had so much promise in how it started. It showed that the scammers are learning and evolving and putting effort into this hustle to get it to be more sustainable than the last. Zhao’s greed with E-Creator was a big factor in its prematurely dying. Just off the top of my head it probably had another 6 months to a year left in it before it fell through.
If Zhao had not been greedy, the scheme would have still gone on but with the same inevitable end waiting for it. Those who still remember MMM will remember the way it all crumbled and died was that withdrawal requests were now taking longer and longer to process. From a few minutes today, to a few hours tomorrow to a few days next week up until investors were waiting for months on end with no approval.
A Ponzi scheme survives and thrives with new investors coming into the system. It’s these new and first-time investors that fund the profits of the existing members and keep the scheme sustainable.
But this market of new investors has a ceiling. The number of people available is finite and as soon as you saturate the market, the money stops coming into the scheme. And when that happens, the profits cannot be fulfilled for existing members. So the time taken for withdrawals to be approved becomes increasingly long and you know how that story goes.
It’s different from network marketing because with network marketing there is a commodity, a product being sold. The profits from selling that product are the profits shared between the network marketing scheme and the marketers or investors. So they tend to outlast Ponzi schemes by quite a good margin.