Maldives crypto dream becomes nightmare as GMCE pyramid scheme collapses

The Gemcue or GMCE investment scheme operated through a web application and promised daily returns of up to two percent through AI-powered trading of the USDT cryptocurrency (a digital token pegged to the US dollar). 

After the Maldives police and the Capital Market Development Authority issued a joint warning last Sunday, confirming it as a pyramid scheme based on collaboration with international partners, withdrawals were blocked on Thursday, sparking panic among investors who stand to lose up to an estimated US$ 3 million. 

“There has been no reply from the marketing department of GMCE. I have lost hope,” an admin of the scheme’s 42,000-member Telegram group posted on Saturday evening, advertising a new “safe and reliable” trading platform called Quantpan. 

More than 50,000 people – nearly a quarter of adult Maldivians – including police officers and lawmakers, are believed to have invested in the Gemcue scheme for USDT mining. 

Seven Maldivians suspected of promoting the scheme have now been identified, the head of the police Anti-Scam Centre told the media. They had joined at the beginning and become senior members, he said. 

“Based on the facts we have, the indication is that this scheme started in the Maldives. However, we cannot say that this scam originates from the Maldives,” Adam Naveed told Dhauru. But Interpol has informed police that it was not active in any other country, he noted. 

Naveed could not be reached for comment on Sunday.

When angry investors who were unable to withdraw USDT from their accounts complained last Thursday, organisers appealed for calm and claimed the problem was related to a regulatory process by the US Treasury Department 

“Don’t worry, everyone. This is a normal cooperation with the investigation process. There is no problem with the funds of the GMCE company. If the funds are normal during the review period, it will be handled normally. We need to wait patiently,” an administrator urged. 

But a purported letter shared in the group was found to be fraudulent. It bore the signature of a fictitious official and the seal of the Securities and Exchange Commission, despite a header from the Treasury Department’s Financial Crimes Enforcement Centre.

The fabricated letter aligned with what the authorities had concluded about the scheme’s fraudulent nature.

According to the Maldives police and CMDA, the unregistered operation lacked any genuine investment activity and relied on recruitment rather than legitimate financial returns. Early investors might have seen small returns funded by money from new participants, which created the illusion of profitability. 

Participation in such schemes constitutes a criminal offence under section 319 of the penal code, which prohibits selling rights to join pyramid schemes, police noted, warning of legal action against those found to be operating, promoting or recruiting participants.   

Pyramid schemes have a hierarchical structure where each participant recruits multiple people below them and earns a commission for bringing in new members. The Gemcue scheme’s team leaders included a ruling party lawmaker who recruited more than 300 people, Adhadhu reported last week. 

The MP did not deny any involvement when asked by Adhadhu.

A day after the police warning, another lawmaker defended the scheme and claimed that participants were “increasing by thousands every day.” Over 70 percent of parliamentarians as well as the majority of political appointees and security service personnel were invested in the cryptocurrency scheme, none of whom have faced any losses, MP Mohamed Abbas from Maldives Development Alliance said. 

International cybersecurity and financial scam monitoring platforms have unanimously identified Gemcue as a pyramid scheme, stressing the global nature of such scams that operate across multiple jurisdictions to evade regulation. 

The international scam alert platform Alertopedia identified GMCE as "a crypto mining scam that tricks investors by promising high profits from cryptocurrency mining" with "no real mining" taking place. They noted that "the lack of transparency is also concerning as we were not able to find the phone number, and email address of Gemcue (GMCE)".

According to CoinLaw, Ponzi and pyramid schemes involving crypto investments scammed more than 1.2 million people globally in 2024. Such scams, which cloak themselves as legitimate investment opportunities with high returns and no risks, are often promoted on social media platforms like Telegram and Instagram.