What's wrong with mmmzr?

For those who don't know it, mmmzr's concept was relatively straightforward: selling 50×50 pixel ad buttons in columns in the site for twice the amount someone paid for the spot below them. The money generated provided a kickback of up to 200% of the initial investment for previous buyers, plus a tidy profit for the site’s creator.

This looked like a borderline illegal pyramid scheme if I'm not mistaken. The legal complications finally led the owner to close it. From his own words:

It's a complicated story, but basically I realised that as an individual I don't have the power, money or the desire to fight buyers who bought ads too rashly and then demanded a refund. The way the business model works is that most of the money that comes in from new ads goes to people with older ads, meaning that any refunds I subsequently make come from my pocket.

Other than the legal aspects, I also see some problems on the content structure. For example, the 50x50 ads were structured as a 7xinf grid, why didn't he fill the entire page with them instead? Would've there been a drawback? Then there's the header, which is too tall, stealing space from the ads.

You can definitely see more issues, but at the end of the day, what do you think would've made that website better, and what could've avoided the legal implication without ruining the revenue model?