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Zeekler.com is under investigation by the Securities and Exchange Commission. According to the SEC website, an emergency asset freeze was necessary “to halt a $600 million Ponzi scheme on the verge of collapse.”
The accusations against Rex Venture Group (the parent company of Zeekler and the ZeekRewards program) are rather serious. From what we’ve been able to gather, the SEC’s investigation focuses on the ZeekRewards program.
Stephen Cohen, an Associate Director in the SEC’s Division of Enforcement, said:
“[Zeekler’s] obligations to investors drastically exceed the company’s cash on hand, which is why we need to step in quickly, salvage whatever funds remain and ensure an orderly and fair payout to investors,”
He went on to say:
“ZeekRewards misused the power of the Internet and lured investors by making them believe they were getting an opportunity to cash in on the next big thing. In reality, their cash was just going to the earlier investor.”
It is important to note that Zeekler met the criteria for being included in our penny auction directory. They had a phone number where they could be reached, a verified business address, user testimonials and a clear fair bidding policy. To the best of our knowledge, all of the auctions they hosted were legitimate auctions with bids placed by real users.
The SEC press release and the SEC complaint against Zeekler make it clear that the focus of their investigation is on the Zeek Rewards program, where users are promised up to a 50% profit share from Zeekler. In other words, penny auctions weren’t the issue. According to the SEC, Zeek Rewards didn’t have the cash on hand to live up to the promises they made to affiliates. This is where the words pyramid scheme or Ponzi scheme come into play.
None of our staff members ever enrolled as Zeekler affiliates, so we have no horse in this race. At the same time, we would like to point out that for all the traffic Zeekler.com garnered, we heard very few complaints from bidders. Our only complaint with Zeekler was the way their Zeek Rewards members spammed their promotional links on PennyAuctionList.com, as well as the Internet in general.
It will be very interesting to see how all of this plays out, especially since more MLM penny auction enterprises have sprung up in the last month or two.
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