The Real Reason KIPI Mydeposit241 Collapsed
As in all pyramid schemes, participants who joined earlier in 2013 and early 2014 were rewarded handsomely. Those who joined late (second half 2014 and 2015) and created long term dreams watched in horror as their dreams turned into a nightmare in January 2016.
I started this website to promote KIPI, and other get rich quick schemes.
Though I knew that KIPI would collapse one day, I still did not expect the collapse to happen to so quickly. KIPI’s collapse brought me back to my senses January 2016.
Now I have decided to use this website to warn people who are new to the world Ponzi and pyramid schemes about their dangers.
1. KIPI's History
KIPI was imported from Russia and established in South Africa in April 2013.
South African KIPI leaders and promoters claimed that KIPI has been operating in Russia for more than 20 years. They also claimed that KIPI has been operating in more than 80 countries around the world.
However, they have not been able to prove their claims. In fact, evidence suggests that KIPI Kipi has been operating in South Africa only.
KIPI grew from a handful of members in April 2013. These handful members were joined by members of another pyramid scheme, Defence X with 170 000 members, which was shut down by the government in 2013. Its leader Chris Walker had suggested that members who had lost money in Defence X should join KIPI to recuperate their losses.
Having lost money already, some members were apprehensive about joining KIPI and were unwilling to lose more. Luckily, those members who joined KIPI reaped the rewards as they had joined it at an early stage while it was growing exponentially.
In April 2015 KIPI administrators in Russia introduced a subscription fee of about R250 per member per annum, payable in bitcoins only. They claimed that the exponential growth of the scheme had put a strain on the systems servers, support, and administration. And so the subscription fee was required to buy more computer servers, improve security, offer better support and management,
Then the unthinkable happened. On the 24th of September 2015, hundreds of thousands of KIPI accounts were hacked. Thousands of members with matured dreams had their virtual currency in the system stolen and were left panicking.
In October 2015 KIPI administrators increased the subscription fee from 0.0698 btc to 0.1 btc per annum. With the skyrocketing Bitcoin price, in Rand terms, the subscription fee increased from around R 300 to over R 700 per annum. The huge increase in subscription fees made it difficult to recruit new members into the system.
A few weeks later KIPI reduced the withdrawal limit from R 100 000 to R 10 000 per transaction, likely due to reserve funds running extremely low. In November 2015, the system started experiencing problems as the member whose account were hacked refused to let go of the kept funds.
By January 2016 it became obvious that the system had collapsed as thousands of participants whose dreams had matured were not able to withdraw their funds.
2. KIPI Accounts Hacking
The hacking of KIPI accounts happened on the 24th of September 2015. The hackers targeted accounts of individuals with huge matured dreams of up to 2 million Rands.
The hackers logged into victims accounts and transferred the KIPI virtual currency into their KIPI accounts. This meant that the victims would no longer be able to withdraw money from the banks as their KIPI virtual currencies had been stolen. KIPI administrators promised to restore the stolen funds as soon as possible, but in the end, they failed to deliver on their promise.
Nobody knows who hacked the accounts, but South African banks, the Government, disgruntled Russian KIPI employees, and even KIPI administrators or owners were suspects in the eyes of the KIPI community.
3. What Triggered KIPI's Collapse?
2 main reasons triggered KIPI's collapse:
1. Hacking of the accounts and the subsequent failure to restore stolen virtual currency
2. The increase in subscription fee from 0.0698 BTC to 0.1 btc and the corresponding increase in bitcoin price from R 3 000 per BTC to more than R 6 000 per BTC
The first reason led the participating members to lose confidence in the system. As a result, they stopped creating new dreams, ceased to continue recruiting new members, and started withdrawing all their funds which were in the system.
The second reason made it difficult for participants who still believed in the system to recruit new members. The subscription fee of R 600 to R 800 was simply unaffordable to much more who aspired to join KIPI,
4. The Real Reason KIPI Failed
Calculations using a simple example of a likely scenario show that KIPI was simply unsustainable.
Thomas donates R 100 000 and expects a payout of R 2 000 000 when his dream matures in 16 months’ time. Do you realise that 20 new or existing KIPI members must each donate R 100 000 over a period of 16 months for Thomas to achieve his matured dream?
From KIPI stats, we know that at least 2 million new people joined KIPI in 2014. I think it is reasonable to presume that at least 1 million of the 2 million new members created long-term dreams, which is their dream payouts would be 20 times of what they had donated.
Therefore, 20 million new or existing KIPI members would have to create dreams over the period of 16 months to payout matured dreams to the 1 million KIPI members. Recruiting 20 million new members would have been impossible as that number far exceeds the population of officially employed people in South Africa – 16 million people.
Even if we repeat the same exercise for short or midterm dreams, the result will be the same. We know that KIPI had over 7 million members (or accounts) by October 2015. It was simply mathematically impossible to keep paying a greater percentage to members whose dreams were continually maturing. KIPI simply did not have enough funds to pay out what was due.
Therefore, the real reason KIPI failed is plain and straight forward. KIPI failed because it was a pyramid scheme. By design, all pyramid schemes eventually fail. The account hacking and high subscription fees simply speeded up the process.
It is quite likely that KIPI administrators engineered the hacking because they could see in advance that the system was under pressure due to many members with huge matured dreams. They probably were hoping to prolong KIPI a little longer. Unfortunately, their actions had the opposite effect.
5. Can KIPI Be Revived From The Dead?
The simple answer is NO. KIPI cannot be revived from the dead.
Remember KIPI grew quickly because leaders were actively recruiting in hall community meetings and other gatherings, in turn, recruited members were using word of mouth to spread a good word about KIPI.
Now members are spreading negativity about KIPI and leaders have abandoned the sinking ship; no active recruitment is taking place.
Too many people have lost confidence in the system. Too many people are owed a lot of money and are not prepared to donate, recruit or say anything good about KIPI.
KIPI’s website may still be alive, but the dreams are no more. A takeaway lesson from the demise of KIPI is that get rich quick schemes do not work. Investing in pyramid schemes is the fastest way to financial ruin.
If you still have an appetite for risk, there are legitimate alternatives out there. My current favourites are My Paying Crypto Ads and eToro Copy Trading System.
Were you a KIPI member? If so, were you one of the lucky ones who made profit or did you lose money? If you lost money, do you still believe in stokvels or get rich quick schemes? Please use the comment section below if you have something to share.