South African authorities are reportedly investigating an alleged bitcoin Ponzi scheme that fell apart after its founder, dubbed Steven Twain, mysteriously disappeared. According to Reuters, the scam defrauded investors out of 1 billion rand ($80 million) after promising them huge returns that never materialized.
The Ponzi scheme was reportedly being run by a company named BTC Global, which grabbed investors by promising them returns of 2 percent per day, 14 percent a week, and as much as 50 percent per month. At press time, the company’s services have been suspended.
Through a statement, South Africa’s police stated:
“Members of the public are believed to have been targeted as part of the scam and encouraged by agents of BTC Global. Some of the investors got paid in terms of the agreement. However, the payments suddenly stopped.”
According to news source Fin24, various victims banded together on social media, and now some believe Twain was an alias and not a real person, although there are several blogs that claim he was indeed a real person. A blog owner named Cheri Ward has revealed she met Twain on “messenger and email,” but never in person. Ward was quoted as saying:
“I pushed him for a live video and asked him to address us all on Skype. He was dead set against it. I knew that if I pushed harder he would pull away. As a leadership we decided that we would let him have his peace, he had after all been making payments on time every Monday to hundreds of people without any trouble.”
BTC Global’s website, at press time, claims that the “admin team cannot locate him,” and asks for those with information to step forward. It adds that the team behind the alleged scheme is “as shocked and angry as everyone,” while adding that everyone “knew the risks involved in placing funds with Steven.”
Per police investigator Yolisa Matakata, the $80 million investors were reportedly swindled out of may just be the tip of the iceberg, as there are “potentially thousands more yet to discover they’ve lost money.”
This case follows one in which South African police detained three in a kidnapping case, in which the criminals demanded a 15 BTC ransom (worth about $120,000) to release a teenage boy.
Last month South African authorities revealed they expected taxpayers to declare their cryptocurrency gains, although the central bank was still in the process of discovering whether these comply with its financial surveillance regulations.