South African BTC Ponzi scheme admits it can’t compensate investors

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It garnered new investors in their thousands in days, but now, Bitcoin Wallet has admitted that it’s unable to pay back its investors. The South African company promised its investors a 100% return on their investment in under a month by investing in cryptos. Unsuspecting investors clamored to stake their money, not aware that the person behind the company barely knew about cryptos himself.

Authorities and the media began suspecting that something was amiss when the company closed its offices in Ladysmith, a city in KwaZulu-Natal province in South Africa. One of the top-ranking executives, Sphelele “Sgumza” Mbatha, at the time assured all the investors that the business was legitimate and that all the money had been invested in cryptocurrencies.

Bitcoin Wallet used social media campaigns to reach out to investors, with several videos circulating that showed people with lots of cash, all claiming to have made it from the company. The company was so popular that people were queuing overnight to have a chance to access the office come morning. According to one report, the company was bringing in more than R2 million ($142,000) in deposits per day. The report also revealed that Sgumza had risen in social status, even being accorded police escort.

On its online platform, it promised investors that it hired professional traders who traded the cryptos, with the profits being handed back to the investors. Part of the script on its website stated, “We have over 150+ professional traders across 5 countries, these traders buy and sell crypto currencies daily and trade. The profits margins are then paid back to our investor.”

But like most other such campaigns that promise overnight riches, Bitcoin Wallet was a scam. And now, Sgumza has admitted that he doesn’t have the money to pay off the investors. Speaking to Ladysmith Gazette, he revealed that he also doesn’t know how the Bitcoin Wallets online platform works and that there was someone else who was pulling the strings. He stated:

“I don’t know what’s going on. I don’t know online or how this system works. I have to be workshopped. The owner of the company is operating the online business. I was only the manager of the Ladysmith branch.

“I won’t continue working. 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.”

However, the online claims channel has been marred by hacking allegations. According to reports by local media outlets, hackers have used fake online platforms for phishing, stealing client credentials and draining their accounts.

Local authorities are reportedly looking into the venture, but no arrests have been made.