South Africa's Bitcoin Wallet investment scheme closed down unexpectedly on July 4 and now angry customers who want their money back are being told there's nothing in the pot to pay them with.
The company's Ladysmith office has become the focal point of investors' ire, where its manager and public face of the operation Sphelele "Sgumza" Mbatha has told them all funds have now been exhausted.
He told the Ladysmith Gazette:
I don’t have cash anymore. The owner says people must go online and collect their money online. I, myself, have invested my money in there.
Local Council Demands Business Plan
While Sgumza claims not to be the owner of the company, it was with him that the local council's representative Siyabonga Maphalala engaged last week when it became clear Bitcoin Wallet was in trouble.
Maphalala told the Ladysmith Gazette that he'd asked Sgumza to produce a comprehensive business plan that would explain how the company generates returns for its clients. He added:
If everything is above board, our Local Economic Development Department will do everything in its power to assist him. However, we cannot condone or be associated with a business that is committing fraud or operating illegally. If we find evidence of this, our legal team will advise the council on how to proceed.
CCN Markets claimed last month that the company was a scam - a ponzi pyramid type scheme - that was allegedly raking in $135,000 a day. CCN's story also claimed that Sgumza was the owner and operator of the company: an allegation that Sgumza continued to deny on Tuesday.
I was only the manager of the Ladysmith branch. I won’t continue working. I don’t have cash anymore.
Regulators were also on to the scam, but once alerted were unable to act in time before the scam imploded - as they all do eventually.
Reported in South Africa's The Citizen, the country's Financial Services Conduct Authority said it could not confirm the licence registration of the scheme and said the certificate used by Bitcoin Wallet "looked suspicious and needed to be investigated".
Meanwhile the National Credit Regulator said:
Bitcoin Wallet is not a registered credit provider and the NCRCP Number used belongs to a Trust based in Drummond, not Ladysmith.
Angry Clients Gather
Angry scenes outside the small, shabby office are expected to continue as those investors who were promised returns of up to 100% try to get even a small amount of their savings back.
Whether owner or just unfortunate frontman, Sgumza - a former paramedic - has profited from the business and acts like a local celebrity with a taste for sports cars and boozy parties, according to The Citizen report.