Last month, a company I started to work with was shut down by the US Government through the US Securities and Exchange Commission (SEC) (here is their claim). Zeekler was looking good to me, and quite honestly, I still don’t see how it could have failed. It’s being called a “ponzi” and calling affiliates “investors.”
For those who don’t know about Zeekler, it was a penny auction site. “Entertainment shopping” as it is mostly well-know for. Quibids.com, and swoopo.com are similar sites for the shopper. You find an item you wish to buy, like an iPad. You buy bids at $1 each. Then every time you bid, the item’s value goes up by 1 penny (thus, penny auction). Say the final bid on of the iPad is $100, that means 100 bids were purchased at $1 each to bid on that item plus the payment of the final value. The total received for that auction would have been $1100.00. We all know that iPad cost about $400 from Apple, so the penny auction site made $700 on that auction.
Enter the ZeekRewards side of this as I understand it…
People were given opportunities to sign on as affiliates through a MLM approach. You could join for free and make money. I chose their $10/month subscription for a few extra bells and whistles. After you become an affiliate, you get 100 bonus points, and you start making profits of approximately 1.6% per day on those points. You could take your earnings and use them to purchase sample bids for people wanting to try the site, which gets you more points, or you can cash those earnings out.
The bonus to all of this was, you could put money into Zeek to purchase more bids and increase the points where you earn profits off of. So you could put $100 in to buy sample bids, and you then will have 200 points, where your 1.6% is $3.20 on one night’s earnings, which I could roll into more bids or cash out no questions asked.
The only requirement was that I placed a classified ad online and provided the link to Zeekler where that ad was placed.
The SEC is claiming that “investors” were misled into a ponzi scheme. I go on the record to say, this was never presented to me as an investment. At NO point were Zeek Affiliates led to believe they were “investors” by the ZeekRewards website or other official channels, and the guy who got me into this never led me to believe I was an investor. I was never told I could get the money out, or that the points had any cash value. It was EMPHASIZED that the points had no cash value.
There was a clear understanding that money was gone. I got points for those bids, and was awarded a profit based on how many points I received. I was given a CHOICE to purchase more bids, keep a percentage for myself or cash all of my nightly profits out. I was making about $10/day on my points, which I willingly rolled back into buy bids. I went into this knowing I wasn’t going to be able to cash out the points, because that wasn’t money. I could only cash out my nightly profits, which was a small percentage of the points. I was seeing the potential, as this nightly amount was growing by the week.
So I bought bids for people wanting to try the site, to get them excited about Zeek. When they got started with Zeek, they bought more bids and bought items on the auctions, which is what made me and other Zeek affiliates money.
I thought it was a great plan. I knew that the night before it was shut down, that the $10 profit was mine to do what I wanted and that was all I would have and that I didn’t have $800, I had $10.
In the land of the free, the home of the brave, our government has gotten so big that they have to meddle in the affairs of those wishing to grow financially. The SEC claims if everyone cashed out it would have bankrupt Zeekler. Are they counting the “points” or are they counting the nightly profits? I wonder if the amount of taxpayer money they are spending to tear this down really justifies the amount the profits shared would have been last night. Remember the points have NO cash value, and never were presented that way. The only cash value was the earnings that had not been used to re-purchase bids.
The only question I hear that is valid, is “where did the ‘profits’ really come from?” If they came from the re-purchased bids, then I can see where this wouldn’t be a sustainable model. If they came from the bids purchased by auction users, then there shouldn’t be a problem. Doesn’t this just mean the company was going bankrupt on its own? How does the US SEC think it has any jurisdiction anyway since this isn’t an investment?