TelexFree recently stopped displaying affiliate weekly returns in US dollars, replacing them with an internal "CR" credit system. All not-withdrawn funds converted to these new credits. Future AdCentral ROI payouts will also issue in credits, not USD.
The change draws a parallel to Zeek Rewards. There, affiliates invested real money which the company converted into "VIP Points." These were an in-house virtual currency meant to manage ROIs and reinvestment. Each VIP Point was claimed to equal one dollar until the Securities and Exchange Commission shut Zeek Rewards down for operating as a $600 million Ponzi scheme.
In March 2013, the court-appointed Receivership for Zeek Rewards issued a clarifying statement. The receiver determined these VIP points merely redistributed funds between affiliates in a Ponzi-scheme fashion. Points generated or accumulated by affiliates would not count as part of a claim for distribution from the Receivership Estate. Millions of points Zeek investors had generated and hoarded were reduced to nothing.
No official announcement has been made about the TelexFree credit system. This leaves investors wondering about yet another sudden change without warning. For now, one TelexFree credit reportedly equals one US dollar. But as the Zeek Rewards aftermath showed, a Ponzi's in-house virtual currency is worthless outside the scheme itself.
TelexFree itself can change the value of these in-house credits at its discretion. It does not require an SEC Ponzi shutdown to do so. The company faces significant liabilities. Affiliates commonly cite an estimated four million AdCentral investment positions. At $299 each, this represents a raw investment of $1.19 billion. The collective ROI liability upon maturation of each position totals $4.16 billion.
TelexFree does not have that money. New investment would only increase these liabilities. And new compensation plan changes make it unlikely the company will raise anywhere near the required amount. The company could, for instance, claim "regulatory requirements" and declare all credits worth five cents.