The Austrian company operating the Lyconet network and the Cashback World program has left thousands of investors worldwide reeling. In Slovenia, where over 10,000 individuals reportedly invested in Lyconet – labeled a Ponzi scheme in several European countries, many fear losing substantial sums, with some having invested over €100,000 or contracted loans to fund their participation.
Overnight collapse shocks investors
MyWorld International, based in Graz, Austria, declared insolvency on 4 August, followed two days later by its network marketing arm, Lyconet. Both entities, though legally separate, operated from the same headquarters and were deeply interconnected within the myWorld ecosystem, previously known as Lyoness.
The collapse caused all associated websites and applications to shut down, leaving investors unable to access their accounts or monitor their investments.
The abrupt closure has sparked panic, particularly in Slovenia, where Lyconet had a significant presence. A Slovenian, Marko Sedovnik, served in the company’s top management, and another Slovenian woman ranked among Lyconet’s highest-tier marketers. Investors, many of whom poured tens or hundreds of thousands of euros into the scheme, now face uncertainty about recovering their funds.
Pyramid scheme allegations and global scrutiny
Since its founding in 2003, Lyoness (later rebranded as myWorld) has faced accusations of operating a pyramid scheme.
While four Austrian civil courts initially labeled it as such, a 2016 ruling by the Higher Regional Court in Austria overturned these decisions. However, authorities in countries like Italy, Norway, and Poland have classified Lyoness or myWorld as a pyramid scheme, banning further recruitment of members. Investigations have also been launched in France, Sweden, Hungary, Russia, Lithuania, Liechtenstein, and Greece.
Lyconet’s business model, which encouraged recruitment and promised high returns, has drawn particular scrutiny. At lavish events, such as the 2023 Lyconet gathering at Germany’s Veltins Arena, top marketers were rewarded with extravagant prizes, including a luxury Mercedes supercar for a Slovenian member.
Such displays, typical of multi-level marketing (MLM) schemes accused of pyramid-like practices, fueled both participation and skepticism.
What were investors promised?
A Slovenian investor, speaking anonymously to Siol.net, revealed that Lyconet promoters pitched investments as opportunities in digitalization and real estate. Many investors, including those in Slovenia, reportedly handed cash directly to higher-ranking marketers, who invested on their behalf without providing official documentation. Some began investing over a decade ago but received no payouts before MyWorld’s insolvency.
The company attributed its financial troubles to the lingering effects of the COVID-19 pandemic and “uneducated and irresponsible” marketers.
However, analysts at BECM dismissed these claims, noting that global markets have largely recovered from the pandemic and suggesting that MyWorld’s real issue was a lack of new recruits bringing fresh capital.
In Slovenia, the local branch of MyWorld, based in Maribor, reported €6 million in revenue and over €1 million in profit in 2024, according to Bizi.si. Despite this, the company has had four bank accounts blocked since 24 September, further complicating matters for investors.
Legal challenges and slim recovery prospects
Antonio Novak, a lawyer from the Celje-based firm Martinčič Novak, explained to Siol.net that investors’ chances of recovering funds depend on their legal relationship with MyWorld or Lyconet. Those who invested expecting repayments with interest are considered ordinary creditors in bankruptcy proceedings. They must file claims within the legal deadline, but repayment is unlikely until after bankruptcy costs, priority claims, and secured creditors are settled.
Investors who were promised ownership shares, as some Lyconet participants were, face an even bleaker outlook. Their claims are treated as subordinated unsecured claims, meaning they are repaid only after all other creditors. Novak warned that bankruptcy proceedings typically yield minimal funds, often covering only procedural costs and partial payments to priority creditors, leaving ordinary creditors with little to no recovery.
In rare cases, if significant irregularities are uncovered, company partners could be held personally liable under legal personality oversight provisions. However, such outcomes are uncommon and difficult to achieve.
As investigations continue and bankruptcy proceedings unfold, the likelihood of recovering significant funds remains slim.
Slovenians have recently suffered from a cryptocurrency Ponzi scheme headquartered in Poland. The lack of accountability fuels scepticism about the country’s ability to tackle such frauds effectively.