As bad as this is, and it is bad, I see it as good

Why? Because he’s now within a hair’s breadth of rock bottom. When he talks about this, don’t give him time to ask for help. When he says it’s bad start pointing out that he’s lucky to have such a network of friends who can help him at at time like this.

Then you’ve got a FINE line to draw. On the one hand you don’t want to play them up so he’s ashamed to ask for help, but on the other, you do want to “assume” they’ll do what good friends would do and help him out.
Then when it’s time, go with the, “Oh? But they’re your friends.
They’ve said so and they’ve said they want you to succeed, so why aren’t they helping you when you need it? Why won’t your friends help you when you need it the most?”

In writing there’s a saying, “Show me, don’t tell me.” This will give you the chance to show your son, instead of telling him, that his “friends” are not going to help him unless he is spending money on tools.

Do not tell him what to do. He’s a big boy and that’ll just create resentment and lead him to want to prove to you how wrong you are.

HOWEVER, and this is important, you have not only the right, but the responsibility, to specify the terms of letting him either move back in or get any help from you. It is only proper that you specify that if you’re going to provide him money to, say, pay the rent, that you know it WILL be spent on rent and his own money from unemployment (or elsewhere) will not be spent on his MLM. If you pay $100 for his rent, and the turns around and spends $50 on his MLM, then you’re basically enabling him to spend money on that instead of keeping alive.

Of course, if you let him move back in, then you can have stricter control. I would not recommend anything like telling him “No MLM!” But you can point out that as long as he lives in your house, rather than pay rent, me must be using his money for utilities, job search expenses, and so on. The idea would be to not ban the MLM or prevent it, but to restrict the money flow (since he doesn’t have money) so he sees what happens once he can’t keep financing their lifestyle.

But yes, if he chooses to keep spending money on the MLM, then don’t help him financially or let him move in — but do be aware of safety issues if he’s sleeping in his car. Basically, the faster he runs out of money to spend, the better off you are.