South African Police Investigate $80 Million Bitcoin Ponzi Scheme

The South African Police said today it has launched an investigation into an alleged fraud that has claimed more than one billion Rand ($80 million) in bitcoin from 30,000 investors.

Funds manager of BTC Global, Steven Twain, disappeared on February 18 leaving admin staff and clients at a loss for funds.

Ponzi Scheme Head Vanishes

A statement on the BTC Global website said:

“The admin team cannot locate him. If anyone has ANY information on how we can get in contact with him please get in touch and let us know. Until Steven Twain resurfaces or is found there is nothing the admin team can do.”

The statement included a request for threats towards the leaders and admins to stop, suggesting legal proceedings as an alternative. It said that all of the admin staff had funded him independently and that they were missing a week’s worth of pay. It does also acknowledge that the staff had only two ways of contacting him.

In an email statement, the police said:

“Members of the public are believed to have been targeted as part of the scam and encouraged by BTC Global agents to invest with promises of 2 percent interest per day, 14 percent per week and ultimately 50 percent per month.”

A ponzi, or pyramid, scheme is a business model that requires a constantly expanding supply of new members. They are illegal in many countries because while they can result in big profits for the founding members, the high numbers of new members lose out when the scheme collapses.

Investigation Supports Sceptical Reviews

Many outside observers were worried about the company after trying to research Steven Twain. Marketing agency SEO Spark reviewed BTC Global and concluded that although the funds manager sounded ‘impressive,’ there was no concrete evidence to back up a single claim.

The review predicted: “This turns BTC Global Team into a Ponzi scheme, and as the story goes, the company will shut down and collapse once investment activity inevitably dies down. Once this happens, the anonymous admin(s) will make off with the majority of the earnings, most all [sic] affiliates will lose out, and that’ll be the end of it.”

The Hawks have launched an investigation into alleged fraud totalling more than one-billion rand by Bitcaw Trading Company, commonly known as BTC Global, after close to 30-thousand investors suffered losses. #sabcnews

— SAfm news (@SAfmnews) May 25, 2018

In February, security specialist Mike Bolhuis posted on Facebook a report on South African BTC Global that stated: “These guys have not been trading since there is no evidence of trading activities at all.” It continues that: “They have been running a full blown pyramid scheme where payment is accepted in Bitcoin and members are promised revenue that they will never earn.”

South Africa has recently been in the news after a ransom request was demanded in Bitcoin for the kidnapping of Katlego Marite. On Wednesday, NewsBTC reported that three suspects were taken into custody over the kidnapping. The demand was made for 15 Bitcoin, worth around $123,000 at the time it was requested on Sunday.

South Africa’s central bank has also announced they are setting up a self-regulatory organisation for the cryptocurrency space. The aim would be to reduce the risk of scams and malpractice while encouraging innovation. Bridget King, Director of Banking Practice, also expressed her concerns over the anonymity involved in the crypto space even though the majority of projects use public ledgers.

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