Enigma Network Review: Crypto & forex bot securities fraud
Enigma Network operates in the cryptocurrency and forex trading MLM niches.
The company is supposedly headed up by founder and President Dave Wiltz.
Who is Dave Wiltz? No idea. He doesn’t appear to have a digital footprint outside of Enigma Network’s marketing.
But that doesn’t matter, because…
The actual people behind Enigma Network are J. Joshua Beistle and Doug Wellens.
BehindMLM last came across Beistle and Wellens in 2020, as co-founders of Essential Access Network.
Essential Access Network sold telemedicine subscription services. The company’s website is still online but Alexa ranks traffic to it as “n/a”.
Practically speaking, Essential Access Network as an MLM company is dead.
With respect to Beistle’s and Wellens’ MLM histories;
J. Joshua Beistle first appeared on BehindMLM in 2013, as President of the JubiRev Ponzi scheme.
Beistle returned in mid 2014 with BrandOnline365, a short-lived pyramid scheme.
Doug Wellens first appeared on BehindMLM in 2014, as co-founder of Infinite Leverage.
Infinity Leverage was a pyramid scheme attached to a marketing platform.
I also want to note Enigma Network’s Vice-President of Sales, Richard Anzalone.
Anzalone was indicted in 2017 on criminal charges related to Infinity2Global.
Run by Rick Maike, Infinity2Global was a $25 million dollar pyramid scheme.
Anzalone pocketed $800,000 as one of the Infinity2Global’s top earners. He stands accused of multiple counts of mail fraud and money laundering.
If convicted, Anzalone is looking at potentially decades in prison.
Anzalone and his co-defendants are scheduled to face trial in July 2022.
I’d also be remiss if I didn’t shout out Enigma Network’s advertised “legal team”:
Wellman and Warrens’ biggest cock up to date was rubber-stamping iPro Network back in 2017.
The SEC sued iPro Network in 2019, alleging it was a $26 million dollar pyramid scheme.
We also weren’t impressed with Warren’s legal analysis of Crypto World Evolution in 2018.
On its website Enigma Network provides a corporate address in Las Vegas, Nevada.
Alexa currently ranks top sources of traffic to Enigma Network’s website as the Philippines (34%), and the US (19%).
Read on for a full review of Enigma Network’s MLM opportunity.
Enigma Network’s Products
Enigma Network markets the usual MLM crypto fluff for $60 a month (4 weeks):
- Crypto Learning Academy
- RFX Academy
- DeFi Portal
- Copy and paste trading
- Learn and Earn
- a mobile app
The real product being sold is access to an automated trading bot:
As above, Enigma Network affiliates invest funds with Enigma Network’s trading bot.
Passive returns are then purportedly derived via forex and crypto trading.
No specifics of Enigma Network’s trading bots are provided.
Access to Enigma Network’s trading bot costs an additional
- $99 a month for four weeks access to the forex or crypto bots;
- $999 annually for access to the forex or crypto bots; or
- $2499 annually for access to the forex and crypto bots.
Enigma Network’s Compensation Plan
The MLM side of Enigma Network pays on retail and affiliate payment of subscription fees.
Subscription fees include the education packs and passive returns trading bot (details above in “products”).
Education Pack Commissions
Enigma Network pays education pack commissions via eleven-deep ranking criteria:
- Customer – sell and maintain 3 subscriptions and have your own monthly $60 subscription fee waived
- Tutor 250 – maintain 3 personally sold subscriptions and generate total downline sales of 10 subscriptions (split 4/4/2)
- Tutor 500 – maintain 3 personally sold subscriptions and generate total downline sales of 25 subscriptions (split 10/10/5)
- Tutor 1000 – maintain 3 personally sold subscriptions and generate total downline sales of 75 subscriptions (split 30/30/15)
- Tutor 2000 – maintain 3 personally sold subscriptions and generate total downline sales of 250 subscriptions (split 100/100/50)
- Coach 5000 – sell and maintain 6 subscriptions and generate total downline sales of 500 subscriptions (split 400/400/200)
- Coach 10,000 – maintain 6 personally sold subscriptions and generate total downline sales of 1000 subscriptions (split 400/400/200)
- Coach 20,000 – maintain 6 personally sold subscriptions and generate total downline sales of 2500 subscriptions (split 1000/1000/500)
- Adviser 50,000 – sell and maintain 9 subscriptions and generate total downline sales of 5000 subscriptions (split 2000/2000/1000)
- Adviser 100,000 – maintain 9 personally sold subscriptions and generate total downline sales of 10,000 subscriptions (split 4000/4000/2000)
- Mentor 250,000 – sell and maintain 12 subscriptions and generate total downline sales of 40,000 subscriptions (split 16,000/16,000/8000)
The “split” refers to downline leg subscription sales ratios. The amounts quoted are minimums to be sold across three downline legs.
Note that retail customer subscription sales don’t generate downline legs.
This means that from Tutor 250, each Enigma Network affiliate must recruit and maintain at least three personally recruited affiliates with an active education pack subscription.
Corresponding education pack commission payments based on rank are as follows:
- Tutor 250s earn $62.50 a week
- Tutor 500s earn $125 a week
- Tutor 1000s earn $250 a week
- Tutor 2000s earn $500 a week
- Coach 5000s earn $1250 a week
- Coach 10,000s earn $2500 a week
- Coach 20,000s earn $5000 a week
- Adviser 50,000s earn $12,500 a week
- Adviser 100,000s earn $25,000 a week
- Mentor 250,000s earn $62,500 a week
Trading Bot Affiliate Ranks
Enigma Network’s trading bot commissions are tied to a second set of affiliate ranks:
- Affiliate – sign up as an Enigma Network affiliate
- Builder – generate 20,000 GV
- Pro Builder – generate 50,000 GV
- Manager – generate 100,000 GV
- Senior Manager – generate 200,000 GV
- Regional Manager – generate 350,000 GV
- Director – generate 500,000 GV
- Senior Director – generate 750,000 GV
- Regional Director – generate 1,500,000 GV
- Influencer – generate 2,500,000 GV
- Senior Influencer – generate 5,000,000 GV
- Global Influencer – generate 10,000,000 GV
Enigma Network’s compensation plan doesn’t clarify whether the above GV amounts are accumulated requirements or monthly.
Trading Bot Residual Commissions
Trading bot residual commissions are paid via a unilevel compensation structure.
A unilevel compensation structure places an affiliate at the top of a unilevel team, with every personally recruited affiliate placed directly under them (level 1):
If any level 1 affiliates recruit new affiliates, they are placed on level 2 of the original affiliate’s unilevel team.
If any level 2 affiliates recruit new affiliates, they are placed on level 3 and so on and so forth down a theoretical infinite number of levels.
Enigma Network caps payable unilevel team levels at thirteen.
Trading bot residual commissions are paid as a percentage of trading bot subscription volume as follows:
- Affiliates earn 25% on level 1 (personally recruited affiliates) and 5% on level 2
- Builders earn 25% on level 1, 5% on level 2 and 2% on level 3
- Pro Builders earn 25% on level 1, 5% on level 2 and 2% on levels 3 and 4
- Managers earn 25% on level 1, 5% on level 2 and 2% on levels 3 to 5
- Senior Managers earn 25% on level 1, 5% on level 2 and 2% on levels 3 to 6
- Regional Managers earn 25% on level 1, 5% on level 2 and 2% on levels 3 to 7
- Directors earn 25% on level 1, 5% on level 2 and 2% on levels 3 to 8
- Senior Directors earn 25% on level 1, 5% on level 2 and 2% on levels 3 to 9
- Regional Directors earn 25% on level 1, 5% on level 2 and 2% on levels 3 to 10
- Influencers earn 25% on level 1, 5% on level 2 and 2% on levels 3 to 11
- Senior Influencers earn 25% on level 1, 5% on level 2, 2% on levels 3 to 11 and 1% on level 12
- Global Influencers earn 25% on level 1, 5% on level 2, 2% on levels 3 to 11 and 1% on levels 12 and 13
Trading Bot Coded Bonus
Enigma Network pays a 20% Coded Bonus on all trading bot subscription volume.
- Builders earn a 2% Coded Bonus rate
- Pro Builders earn 4% Coded Bonus rate
- Managers earn a 6% Coded Bonus rate
- Senior Managers earn an 8% Coded Bonus rate
- Regional Managers earn a 10% Coded Bonus rate
- Directors earn a 12% Coded Bonus rate
- Senior Directors earn a 14% Coded Bonus rate
- Regional Directors earn a 16% Coded Bonus rate
- Influencers earn an 18% Coded Bonus rate
- Senior Influencers earn a 19% Coded Bonus rate
- Global Influencers earn a 20% Coded Bonus rate
When an Enigma Network affiliate sells a trading bot subscription, they are paid their corresponding rank bonus rate.
Whatever is left over is paid upline to higher ranked affiliates, up until what’s left of the full 20% is paid to the first Global Influencer.
Coded Bonuses thus allow higher ranked affiliates to collect the difference in their Coded Bonus rate with lesser ranked affiliates in their downline.
Trading Bot Check Match Bonus
Enigma Network pays a Check Match Bonus on earnings by unilevel team affiliates.
- Affiliates earn a 10% match on level 1 (personally recruited affiliates)
- Builders earn a 10% match on levels 1 and 2
- Pro Builders earn a 10% match on levels 1 and 2 and 5% on level 3
- Managers earn a 10% match on levels 1 and 2, 5% on levels 3 and 4 and 2% on level 5
- Senior Managers earn a 10% match on levels 1 and 2, 5% on levels 3 and 4 and 2% on levels 5 and 6
- Regional Managers earn a 10% match on levels 1 and 2, 5% on levels 3 and 4 and 2% on levels 5 to 7
- Directors earn a 10% match on levels 1 and 2, 5% on levels 3 and 4 and 2% on levels 5 to 9
- Senior Directors earn a 10% match on levels 1 and 2, 5% on levels 3 and 4 and 2% on levels 5 to 11
- Regional Directors and higher earn a 10% match on levels 1 and 2, 5% on levels 3 and 4 and 2% on levels 5 to 12
Enigma Network’s compensation documentation doesn’t specify if the check match is paid on just residual trading bot commissions or all commissions.
Enigma Network takes 2% of company-wide subscription volume and places it into three rank-specific Bonus Pools.
- Influencers earn an equal share in a 0.5% Bonus Pool
- Senior Influences earn an equal share in a 0.5% Bonus Pool
- Global Influencers earn an equal share in a 1% Bonus Pool
Joining Enigma Network
Enigma Network affiliate membership is $15 a month.
Enigma Network’s compensation plan suggests the $60 education package is mandatory (“provides access”) for affiliates.
It also appears to be a prerequisite for trading bot subscription access.
Although all figures quoted in Enigma Network’s compensation plan are quoted in USD, the company only accepts bitcoin.
Enigma Network Conclusion
Enigma Network’s MLM opportunity can be broken down into two distinct components; an education package pyramid scheme and trading bot securities fraud.
The education packages are available to retail customers. Builders requiring three downline legs however translates into recruitment over retail.
There are no retail qualifiers so expect retail education package membership to be virtually non-existent.
This isn’t surprising, seeing as the education package subscriptions are just a gateway to the much higher priced trading bot subscriptions.
Here Enigma Network offer a security by way of passive return.
To establish the existence of an investment contract, regulators in the US rely on the Howey Test.
Under the Howey Test, an investment contract exists if there is an “investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.”
In Engima Network we have affiliates placing funds under control of a bot.
The bot is a “common enterprise”. And funds are obviously invested with the bot “with a reasonable expectation of profits”.
The bot is run by Enigma Network, satisfying the profits are “derived from the efforts of others”.
At time of publication neither Enigma Network, J. Joshua Beistle or Doug Wellens are registered with the SEC.
Forex trading additionally requires Enigma Network to be registered with the CFTC, which it is not.
Offering securities to US residents without registering with the SEC is securities fraud. Running a passive return forex scheme without CFTC registration is also illegal.
What we have in essence with Enigma Network is the “lulz can’t touch our money” model.
When you give access to your funds to a third-party, Enigma Network in this case, they are able to do with the funds as they please.
Note that regulatory registration requires periodic filing of audited financial reports. This is to ensure trading companies are doing what they claim to be.
Social media marketing is not a substitute for regulatory registration and filing of audited financial reports.
With respect to the pyramid side of Enigma Network, math guarantees the majority of participants in a pyramid scheme lose money.
The trading bot will work until it doesn’t, leaving the majority of affiliates out of pocket once subscription fees are factored in.
Those two factors shouldn’t be ignored. That said, securities fraud is Enigma Network’s most pressing regulatory concern.
One need only look at the people involved and their past scams to see how MLM companies committing securities fraud play out.