A lucrative South African “investment scheme,” Bitcoin Wallet, which attracted hundreds of investors a day many of whom have clamored at the company’s doors to invest, now has a shuttered office attracting hundreds of protestors demanding their cash back, as per Ladysmith Gazette.
Many regulators and media have been suspecting the enterprise to be running a Ponzi scheme and as of July 4, it has been shut down. With the promises of 100-percent returns in a period of just over two weeks through reinvesting customer deposits in cryptocurrencies, it managed to entice a hoard of investors. The same investors are trying to find answers for where their money went.
Sphelele “Sgumza” Mbatha, the founder of Bitcoin Wallet admitted to the publishing on Saturday that he doesn’t have any more cash to pay out to his clients. He added:
“I don’t know what’s going on. I don’t know online or how this system works. [It has] to be workshopped.”
Before it went offline, Bitcoin Wallets managed to grow much popularity, so much so that Mbatha stopped taking in deposits of less than 5,000 rand or $350. African News Agency speculated at the time that the firm received more than R2 million in cash deposits per day, indicating “the largest daily cash flow in the whole of Ladysmith.”
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 publication further spoke with market regulator Financial Services Conduct Authority (FSCA), stating that the registrar’s signature in Bitcoin Wallet’s business certificate looked like it had been forged and needed to be investigated.
In spite of many concerns reported of potential fraud, hundreds of South Africans went ahead and invested in the cryptocurrency upstart and Mbatha certainly made it easy. As per ANA, Bitcoin Wallet office observed a long line of investors, providing their basic identification, signing a single page form and depositing their money, in hopes of earning 100-percent returns in 15 working days. The company charged a 10-percent administrative fee for there so-called services.
Upon asking about the business operations, Mbatha stated that given funds 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.”
As for now, Mbatha claims that he as only the “manager of the Ladysmith branch,” he added “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 has previously reported that Mbatha had become a local celebrity, drove luxury cars, and even had a police escort.
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