According to The Citizen, the cryptocurrency scam is operating from Kwa-Zulu Natal’s rural town of Ladysmith.
The scam is estimated to be drawing in R2 million ($135,000) daily in a town of just over 60,000 people.
Reports are that some of the unsuspecting investors in the scheme are waking up as early as 3am to put their funds in the scheme. The investment has grown so popular that it no longer accepts any amount below R5,000 ($337), a staggering increase from the initial R100 ($6.74) limit it accepted at its inception.
The investment scheme owned and operated by Sphelele ‘Sgumza’ Mbatha is promising returns of 100 percent within 15 working days. Sgumza, a former paramedic, has made a killing from the scheme, growing into a town celebrity, having to move with a police escort.
Ladysmith residents post videos of Mbatha’s flashy cars on social media, and call him “uNkulunkulu waseMnambithi” [The Lord of Ladysmith]. He is growing a reputation for throwing parties, where alcohol flows freely just like the cash he dishes out.
Per The Citizen, Sgumza had indicated in an interview with a community radio station that he was generating profits for his investors by buying and selling Bitcoin. He only charges a 10 percent administration fee.
When contacted by an African News Agency reporter, Sgumza declined indicating that he would have to be paid to sit for one.
Trading in Bitcoin has proven to be profitable to many the world over. This is despite seasoned investors such as Warren Buffet calling it “rat poison”. Something that might prove likely for many of the unsuspecting Ladysmith investors if the scheme tanks.
In its trading history, there is not a single instance in which Bitcoin rose with 100% in a three week period. The largest gain the crypotocurrency ever made was a 56% gain between 1 May and 14 May.
The currency has made a 160% gain from its 2018 low of $3,200. Sgumza’s scheme purports to be registered by various South African regulators, some of the documents appear to have been forged.
Additionally, the investment scheme appears to be overcompensating by displaying documents at its ofces from nonrelevant regulators. On display at its ofces are registration documents from the National Credit Regulator, a body whuch does not regulate investments.
Additionally, the certificate also does not have the font that is used by NCR. In recent years, due to poor financial literacy laws and a poor regulatory environment many Africans have been victims of pyramid schemes. Millions are lost as many fall prey to promises of making great returns from these schemes.