The world of MLMs is fraught with uncertainty and potential deception. One such example is the case of Catly, a company that has raised numerous red flags for savvy investors. In this investigative piece, we’ll delve into the numerous aspects of Catly that raise questions about its legitimacy and potential risks to investors.
(Source: https://behindmlm.com/mlm-reviews/catly-review-catly-token-staking-model-ponzi/)
How exactly does a Ponzi scheme operate?
An investment fraud known as a Ponzi scheme draws investors with claims of great returns and no risk but fails to invest the money as stated. Instead, it pays off earlier investors with money from future investors while maybe keeping a portion of the profits. These schemes typically fail when recruiting investors becomes challenging or when multiple investors attempt to cash out. They depend on a steady flow of new buyers to operate. They are called after Charles Ponzi, who ran a similar scam using postal stamps in the 1920s.
1. Ownership and Executive Information: A Ghost Ship
Exploring Catly’s digital footprint, the first concern that arises is the company’s lack of transparency. In the modern business landscape where transparency is king, it fails to provide any ownership or executive information on its website. As of the time of writing, the company’s homepage is merely a sign-up/sign-in form, with no mention of the team behind the operation.
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A note of caution: If an MLM company is not openly upfront about who is running or owns it, it’s advisable to think twice before joining or investing any money.
2. The Enigmatic Web Domain
Further adding to the mystery, their website domain (“catly.io”), was privately registered on March 2nd, 2023. This lack of information, combined with the absence of any company details, paints a picture of an operation shrouded in secrecy.
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3. The Whitepaper: A Glimpse into Catly
After some digging, its whitepaper was accessed, which unfortunately did not provide any further clarity regarding the company’s structure or leadership. Instead, the most interesting find was within the source code of the whitepaper: Chinese text.
The presence of Chinese in the source code suggests that the individuals running this MLM scheme may have connections to China, Singapore, or Malaysia. However, without further evidence, this claim remains speculative.
4. Website Traffic Anomalies
Analyzing their website traffic figures reveals another unusual pattern. According to SimilarWeb, Catly’s website visits jumped from just 89,200 in April 2023 to an incredible 6.8 million in May, and even higher to 9.8 million in June. This rapid and exponential increase in traffic is highly unusual for a new website and suggests the use of artificial traffic.
Furthermore, the primary sources of traffic to Catly’s website were Russia (24%), Ukraine (15%), and Indonesia (11%). The high proportion of Russian traffic, combined with the questionable traffic patterns, raises further questions about Catly’s operations.
5. The Absence of Retail Products or Services
Another red flag for MLM companies is the absence of retail products or services, which Catly unfortunately checks. The only thing affiliates can market is the Catly affiliate membership itself. This model is not sustainable and can be indicative of a pyramid scheme.
6. Catly’s Compensation Plan
Their compensation plan involves affiliates investing in tether for CATLY tokens, with the promise of a daily 3% ROI. This staking investment plan runs for 15 days, during which the staked CATLY is locked.
Referral commissions are paid via a unilevel compensation structure, capped at ten unilevel team levels. The percentage of commission decreases with each level, ranging from 3.5% for personally recruited affiliates (level 1) to 0.1% for level 10.
7. Joining Catly
Joining them as an affiliate is free, but full participation requires investment in CATLY tokens. It solicits investment in tether, a popular cryptocurrency.
8. The Legalities: Catly’s Claims vs Reality
It claims to adhere to local laws and regulations and mentions having obtained the US MSB (Money Services Business) license and US Foundation license. However, these are not financial regulatory registrations, and for the purpose of MLM due-diligence, are essentially meaningless.
9. The Exit Plan
Interestingly, Catly has a plan for when 70% of the $CATLY tokens are minted. The company plans to shift its focus towards seeking listings on reputable cryptocurrency exchanges. This could potentially be an exit strategy, allowing the company to disappear after dumping CATLY tokens on exchanges.
10. Conclusion: A Ponzi Scheme in Disguise?
Taking into account the red flags mentioned above, it seems likely that Catly is operating a Ponzi scheme disguised as a staking model, built around its CATLY token. Without new investors, the scheme is likely to collapse, leaving the majority of participants at a loss.
Final word: The lack of transparency, irregular website traffic, absence of retail products, and questionable legality make it a risky venture. Always conduct thorough due diligence before investing in any MLM opportunity.
