Money and Markets

Namibia just banned the Crowd1 get-rich-quick scheme as a pyramid. SA is its biggest market.

Business Insider SA
The Crowd1 app, as advertised on the Google Play Store.
  • The Bank of Namibia has banned the Crowd1 get-rich-quick scheme after an investigation that found it to be a pyramid that must inevitably collapse.
  • “As soon as the recruitment of new members ceases, members at the bottom of the structure will not receive the promised bonuses or owner rights," the regulator warns.
  • Crowd1 has sought to spread throughout Africa, and recently launched in the Philippines – but by website traffic South Africa is by far its biggest hunting ground.
  • That, plus the scale of its operations, suggest South Africans have a great deal of money "invested" in Crowd1.
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Crowd1, a get-rich-quick operation that appears to be hugely successful in South Africa, has been banned from Namibia.

On Friday the Bank of Namibia (BON) declared Crowd1's operations to be an undesirable practice, which in terms of that country's laws could mean a R1 million fine or 10 years in prison for anyone who continues to promote it.

"Crowd1 does not sell tangible products or render any service of essential value, but the primary source of income for Crowd1 is the sale of membership packages to new members," the BON said – describing, without ever using the words a classic pyramid or Ponzi scheme.

The organisation's model is not sustainable, the BON said, "and will result in members of the public, especially those at the bottom of the scheme, losing their money."

The BON ordered participants to immediately stop operations.

Crowd1 operates via mobile apps available in the Apple and Google Play Stores. Those solicit euro-denominated payments ranging from the equivalent of R1,600 up to more than R40,000 for top-end "packages", which then apparently makes members eligible to receive part of the sign-up payments of new members they recruit. (In one of many possible complex scenarios, anyone who signs up four more people for the cheapest package within 14 days of joining is promised an immediate R2,000 bonus.)

What, exactly, Crowd1 supposedly does to earn money changes from explanation to explanation.

It has claimed to sell software created by foreign developers, so cutting out Google and Facebook as advertisers, but there is no sign that it does so at any significant scale. It has also both claimed to be involved in sports betting – with visual references to sport in South Africa and Kenya, while insisting it is not a gambling company.

Crowd1 sports betting

In South Africa Crowd1 representatives have said that it offers "a business everyone will understand" and described that as a business model tailored for the network economy and crowd thinking" – seemingly without any further detail or explanation.

On its website, the organisation seems to suggest that it is building an audience for future, undefined crowdfunding opportunities, and will act only as an education provider and filter for cases where "opportunity knocks".

Crowd1 advertised a head office in Spain and has a registered corporate presence in Cyprus, but much of its publicity is first created in Russian.

It is not clear how much money South Africans have at stake in Crowd1, but the scale of its operations – and the source of its web traffic – suggest very large amounts.

Crowd1 recently launched operations in the Philippines and in Turkey, and has sought to establish itself in other parts of Africa as well as South America. But according to an estimate from Alexa, a unit of Amazon, its website drew nearly 30% of its traffic from South Africa over the last 30 days. The second biggest source of visitors was Russia, at 8.5% of the total.

According to a Crowd1 video (see below) it drew 10,000 people to its South African launch in November.

Watch: Crowd1's promotional video on its launch in South Africa.

See also: South Africans may have lost millions to a Canadian-American ‘world top leading financial company’ that never existed

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