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Multi-Level Marketing Systems Multi-Level Marketing Systems are also fraudulent schemes in the world of ICO and should be completely avoided by investors. Multi-Level Marketing Systems work based on Multi-Level Tokens (MLT) which are inbuilt in the system. MLT is an ERC20 token built on the Ethereum blockchain. The token is a derivative structural product that gives token holders the right to acquire income out of the increased value of Ethereum. Token holders will also earn ―coupon revenue‖ from a bonus program built into the token‘s smart algorithm. The bonus is earned through referrals; therefore, you are encouraged to convince friends and family to buy the tokens, in order for you to earn. Many Multi-Level Marketing Systems are fraudulent schemes where the bonus earned is not usually paid out, but rather, the investors disappear with the income received during referrals.

The Multi-Level Marketing System way of operation can be equated to a Ponzi scheme, which is a fraudulent investment promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. Just like the Ponzi scheme, Multi-Level Marketing Systems focus all their energy on attracting new clients to make investments through buying tokens. The income earned through the referrals is then utilized as a return on investment on the project‘s founders. A constant flow of new referrals is necessary for the scheme to sustain itself, together with the founders. When this flow runs out, the scheme falls apart, leaving token buyers with huge losses and in disarray.