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South Africa Suffers From New Crypto Ponzi Schemes


Denis Goncharenko, Konstantin Rabin

Recently, we paid attention to Africa as a promising place for blockchain and crypto development, due to the educational activities led by companies and enthusiastic groups and associations. The educational programs should be popularized even more, because of fraud and scams following the path of technological growth as it already stormed in Asia in recent years.

Now, South Africa has been taken by storm by what clearly looks like a typical Ponzi scheme. A cryptocurrency company by the name of Bitcoin Wallet has been enticing the population of Ladysmith, a city in South Africa to deposit their hard-earned money with them with promises to make them 100% of their deposit within two weeks time.

The scheme has become extremely popular, to a point where people were sleeping outside the Bitcoin Wallet office in order to get on the crypto hype as soon as possible. According to local police reports Bitcoin Wallet was generating as much as $135,000 per day in revenue.

However, it’s been 15 days for some investors and now they’re spending their time outside of Bitcoin Wallet’s offices waiting for an answer from the owner about what happened to their funds. Even if they do get an answer from the owner, assuming he’s still in South Africa, it’s going to be disappointing.

Police investigate

According to local police, they’ve conducted investigations about a potential Ponzi scheme in Ladysmith but were not able to come up with any tangible evidence against Bitcoin Wallet, therefore the investors have to sit outside the offices and wait for the confirmation. Many investors are accusing the police of conspiring with Bitcoin Wallet and trying to cover up the crime, but these are just accusation of frustrated investors, which are yet to be confirmed.

When did the scheme start and what could happen next?

Bitcoin Wallet first appeared sometime in June 2019 and has already passed the 15-day threshold for early investors, but hasn’t paid out the due profits. According to a local media outlet, African News Agency, the owner of Bitcoin Wallet is a man named Spelele “Sgumza” Mbatha, who had an interview with the agency in June and claimed that Bitcoin Wallet’s actions were legitimate and that the company was indeed re-investing funds into the cryptocurrency market and making profits for their investors. Seeing how the 15-day threshold has already passed, Mbatha will have to address his investors with some kind of explanation, which is yet to come. But if Bitcoin Wallet is indeed a Ponzi scam, it’s possible that he’s already fled the country and is consolidating his funds in an offshore account somewhere.

South Africans were a good target

01-07-2019 14:22:24  |   News
South Africans are almost #1 in the charts for cryptocurrency queries on Google, a little bit behind Ghana and Nigeria. Targeting the population of Ladysmith may have been deliberate due to the already existing interest towards cryptos. In fact, South Africans have also been a target in past crypto schemes, but it was much more technical. Hackers were targeting peoples’ devices to install mining malware and steal computing power.

Yaliwe SOKO, United African Blockchain Association Chairperson commented on recent scam activity:


“Such schemes target rural areas where people are uneducated on crypto and blockchain. This highlights the importance of education in Africa. By now, people are looking for a quick escape from poverty and get into traps.”

When it comes to Bitcoin Wallet, it’s a much more open business, but clearly lacks transparency. Hardly such schemes could prove to be a legitimate business, but it’s highly unlikely to make 100% profits in 15 days regardless of one’s experience, and especially keeping it consistent over hundreds of investors. It could be yet another fraud and,unfortunately, amid regulatory breaches, Africans are to face these activities just like the rest of the world did for several years.

Image courtesy of IOL.co.za


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