Bitcoin Wallet, a lucrative South African “investment scheme,” used to attract hundreds of investors a day, many of whom clamored at the company’s doors to invest. Now, the company’s shuttered office is attracting hundreds of protestors demanding their cash back, according to Ladysmith Gazette.
As of July 4, the enterprise that many regulators and media had begun suspecting of operating as a Ponzi scheme shut down. The firm enticed investors with promises of 100-percent returns in just over two weeks by reinvesting customer deposits in cryptocurrencies. These same investors want to know where their money went now that the company closed.
Bitcoin Wallet founder Sphelele “Sgumza” Mbatha admitted to the Ladysmith Gazette on Saturday that he doesn’t have any more cash to pay out to clients.
“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.
Before closing, Bitcoin Wallets had grown so popular that Mbatha stopped taking in deposits of less than 5,000 rand or $350. At the time, African News Agency speculated the firm received more than R2 million in cash deposits per day, representing “the largest daily cash flow in the whole of Ladysmith.”
A former paramedic, Mbatha claimed in a June radio interview that his operation was aboveboard though efforts by the ANA to confirm the legitimacy of the business registration proved futile.
The news agency spoke with market regulator Financial Services Conduct Authority (FSCA) which reportedly stated that the registrar’s signature in Bitcoin Wallet’s business certificate looked like it had been forged and needed to be investigated.
Despite these reported concerns of potential fraud, hundreds of South Africans had invested in the cryptocurrency upstart. Mbatha certainly made it easy.
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.
The company charged a 10-percent administrative fee.
When asked about his business operations Mbatha stated funds entrusted to Bitcoin Wallets were reinvested in cryptocurrencies and then resold to the market at a higher price. Later, Mbatha declined a follow up interview stating, “time is money.”
Now, Mbatha claims he was only the “manager of the Ladysmith branch,” and that “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.”
ANA previously reported Mbatha had become a local celebrity, drove luxury cars, and even had a police escort.
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