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. It managed to attract a large number of investors with its promise of 100 percent returns within a matter of two weeks by reinvesting customer deposits into cryptocurrencies. The same investors are trying to find answers for where their money went.
Sphelele Mbatha, founder of Bitcoin Wallet, admitted to the publication on Saturday that he didn’t have enough cash to pay his clients. He also added:
“I don’t know what’s happening. I don’t know how the system works online. It must be workshopped.”
Bitcoin Wallets were very popular before it was taken offline. Mbatha stopped accepting deposits below 5,000 rand, or $350, in fact. 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 stated in a radio interview that his operation was legal, despite attempts by the ANA for confirmation of the business registration. Further, the publication spoke to Financial Services Conduct Authority (FSCA) about Mbatha’s claim that his operation was aboveboard. However, attempts by the ANA to confirm the legitimacy of the business registration were unsuccessful.
Despite concerns about fraud, many South Africans invested in the cryptocurrency startup. Mbatha made it simple despite all of these concerns. According to ANA, Bitcoin Wallet Office observed a long line, with investors providing basic identification and signing a one-page form. They then deposit their money in the hopes of earning 100 percent returns within 15 working days. For these services, the company charged a 10 percent administrative fee.
Mbatha answered questions about the business operations and stated that the given funds were reinvested into cryptocurrencies, then resold to market participants at a higher rate. Mbatha later declined to answer questions about the business operations, stating that “time is money.”
Mbatha says that he is only the manager of Ladysmith’s branch, and he said that he will not continue to work. I don’t have any cash. According to the owner, people should go online and get their money online. I have also invested there my own money. I submitted my bank details online, and I’m now waiting.
ANA previously reported that Mbatha was a local celebrity who drove luxury cars and had a police escort.