Anyone who puts money in is supporting the scheme and all of the returns that they get will be dirty money from naive later investors, often people who were referred into the scam.
I've seen a few different stripes of MLM scheme. Some actually generate value, like the ones that sell the offbrand products, or privately made products. If you can generate customers, you can actually make value in the system (not just extract it from others in the system). But for the ones that are thinly veiled Ponzi schemes; yes, this is blood money.