South Africa’s Directorate for Priority Crime Investigation (DPCI), also known as The Hawks, have stated that they are currently running an ongoing investigation into a major bitcoin scam. BTC Global is the main culprit and reports say they have stolen over $80 million (1,187,212,000 Rand) worth of bitcoin from investors all over the world.

In an interview with TimesLive, Hawks’ spokesperson Captain Lloyd Ramovha said:

I have spoken to one of the investigators in our team and he has confirmed that this matter came to them about two weeks ago. There are in excess of 25‚700 complainants with many outside South Africa. The amount is over $50-million and could rise as more victims come forward. The investigation is in its infancy. I also cannot say whether it is a Ponzi scheme. BTC Global is being investigated for contravening the Financial Advisory and Intermediary Services Act

Ponzi Scheme

Steve Twain, BTC Global’s “master trader” was the main selling point of this scam. BTC Global told users to invest their bitcoins with them by sending between 6,000 and 1.4M worth of rand in order to see weekly returns of around 14% in bitcoin. BTC Global users were getting irregular weekly payments for 2-3 weeks before Steve Twain supposedly “went missing”.

As it stands, there is no information about Steve Twain and many people doubt he is a real person. Though it is a shame that so many people were scammed by BTC global, 5 minutes spent researching into this company would have provided substantial evidence that the company was not to be trusted.

The company’s “Master Trader” Steve Twain is nonexistent and there are no records of his exploits or credentials online. This is already highly suspicious as BTC Global stated that he had 6 years of trading binary options, claiming he provided his investors with returns of 40% weekly. This is a huge red flag as The Consumer Protection Act states that any scheme that offers returns of 20% above the repo rate is a “multiplication scheme” – otherwise known as a Ponzi scheme. The real bitcoin scam.
BTC Global offered 14% a week, with hopes of seeing 40%. Both of these rates far exceed the 20% repo rate.

Can I Avoid these scams?

Ponzi schemes and scams similar to this have been in circulation far before cryptocurrency was popular. Usually, they are very easy to identify if you spend the time to look into who you’re doing business with. As cryptocurrency world is a more delicious target for scammers, they are targeting bitcoins, as they look to find ways for bitcoin scam. While it is often difficult to determine whether an ICO is legitimate or not, you should spend some time looking for proof of endorsements. Seeing if any reputable figures are involved with a project is a good way to test its authenticity.

In the event that you have a good knowledge of blockchain technology, try reading the project’s whitepaper. You can often determine the authenticity of an ICO by reading its whitepaper. These white papers give you an indication of what the ICO is working toward. If it’s something unrealistic or highly optimistic for a small ICO, there’s a high chance it is fraudulent.

In particular, one of the most prevalent scams in the cryptocurrency world is email scams.
The process of signing up for cryptocurrency services can expose your email address. This can lead to you receiving specially tailored scam emails.
Recently, a number of blockchain users received fake emails from an address impersonating MyEtherWallet. These emails claimed that users needed to log into the website in order to protect their account. Logging into this fake website sends the users’ account details to the scammer, allowing him access to their crypto wallets.

What does this mean for cryptocurrency in South Africa?

For South Africa, this is a huge deal. Over 1 billion worth of rand in bitcoin has been stolen by over 27,000 people, as this is the biggest bitcoin scam for now, but this isn’t the end. SARS is going to be taxing cryptocurrency in South Africa, which means if they were to ban it now, they would be missing out on an opportunity to make more money. Despite all of the bumps in the road, If you’re in South Africa and you’re looking to get into cryptocurrency now is the best time. Scams and Ponzi Schemes are not exclusive to cryptocurrency, and with 5-10 minutes spent researching, you can avoid scams.

However, the cryptocurrency world is still picking up traction day by day. Buying Bitcoin and other altcoins are completely safe. Just keep your wits about you. If an investment opportunity looks too good to be true, it usually is.

Leave a Reply

Your email address will not be published.

Read more ...

Disclaimer Notice:

This article is intended to educate and should in no way be seen as investment advice or an enticement to use the platform. Bitcoin is highly volatile with big profit opportunities but you should also remember that you could lose part or all of your investment whenever you take part in any high risk investment. Bitcoin trading is not a regulated industry in South Africa, which in itself carries additional risks. IF YOU ARE NOT AN ASTUTE BITCOIN TRADER, SEEK INDEPENDENT FINANCIAL ADVICE BEFORE MAKING ANY INVESTMENTS.