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3 months ago

Crypto Ponzi Scheme Upsets Investors Saying, It Has ‘No Cash to Pay out’

A supposed lucrative South African “investment scheme,” Bitcoin Wallet attracted hundreds of investors a day from inception; reportedly, many people clamored at their doors just to invest. Unfortunately now, hundreds of protestors are now demanding their cash back at the company’s shuttered office, according to Ladysmith Gazette. 

The company lured investors by promising 100-percent returns in just over two weeks when they reinvest customer deposits in cryptocurrencies. It had already been suspected by many regulators and media by July 4 that the enterprise which was operating a Ponzi scheme had shut down. 

The founder of Bitcoin Wallet, Sphelele “Sgumza” Mbatha said over the weekend that he doesn’t have any more cash to pay out to clients in a talk with Ladysmith Gazette. “I don’t know what’s going on. I don’t know online or how this system works. [It has] to be workshopped,” he said. This is enough to agitate customers and get them on the neck of the company for their refunds.

Mbatha stopped taking in deposits of less than 5,000 rands or $350 because Bitcoin Wallets had already grown so popular before they closed.  African News Agency (ANA) at the time, speculated the firm received more than R2 million in cash deposits per day, representing “the largest daily cash flow in the whole of Ladysmith.” Efforts aligned towards confirming the legitimacy of the business registration were unsuccessful.

Financial Services Conduct Authority (FSCA) which is a market regulator recanted to a news agency that the registrar’s signature in Bitcoin Wallet’s business certificate looked like it had been forged and needed to be investigated. Also, there had already been complaints and reports about possible fraud tied to the company but the founder definitely played his cards right as many South Africans still put their money in the crypto startup.

The company charged a 10-percent administrative fee and "according to ANA, investors would queue up overnight outside the Bitcoin Wallet office, provide basic identification information, sign a single page form, deposit however much they could, and then wait 15 working days to receive 100-percent returns." ANA previously reported Mbatha had become a local celebrity, drove luxury cars, and even had a police escort.

Mbatha stated that funds entrusted to Bitcoin Wallets were reinvested in cryptocurrencies and then resold to the market at a higher price when he was questioned about his business works. He later declined a follow-up interview saying, “time is money.”Mbatha now claims he was only the “manager of the Ladysmith branch,” and that “I won’t continue working...  asked about operations now, he said "I don’t have cash anymore. The owner says people must go online and collect their money online. I, myself, have invested my money in there. I submitted my banking details online and now I am also waiting.”


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Credits - Daniel Kuhn


Anita O.

Lover of tech and blockchain.

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