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Angry mob burns down home of suspected Bitcoin swindler

Angry mob burns down home of suspected Bitcoin swindler


After admitting the cash was gone

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Illustration by Alex Castro / The Verge

A man thought to have been behind an alleged Bitcoin Ponzi scheme has had his house looted and burned to the ground in South Africa, reports Times Live. Sphelele “Sgumza” Mbatha was reportedly the operator of “Bitcoin Wallets,” a scheme which promised investors a 100 percent return on their investment after 15 days. 

The arson came a week after Mbatha admitted to the Ladysmith Gazette that he didn’t have any more cash to pay out, and said that investors would need to submit their details online to receive their payouts. He also claimed to not be the owner of the company, despite having registered the business “Bitcoin Wallets Achievers” the previous week. The following week he then said that hackers had infiltrated the website and had stolen investor’s money, according to Times Live.

Mbatha’s whereabouts are currently unknown

The arson came after angry crowds had previously gathered outside Bitcoin Wallets’ headquarters as well as the local police station. Mbatha was reportedly offered assistance by the authorities to relocate the company on the condition that he provided a business plan to prove it was legitimate. However, the documents had not been produced as of last week. A spokesperson from South Africa’s National Credit Regulator had previously raised doubts about the company’s official documentation. 

As recently as one month ago, Bitcoin Wallets claimed to be taking in as much as R2 million (around $143,000) a day, according to a report in The Citizen. On at least one occasion, the company saw 200 people queued up outside its offices waiting to invest, and it had reportedly increased its minimum investment to R5,000 (around $357). 

This would not be the first time we’ve seen the hype around Bitcoin used to lure in unsuspecting investors. Back in 2012, Trendon Shavers abruptly closed down Bitcoin Savings & Trust after having amassed $4.5 million worth of Bitcoin. He later plead guilty to having operated a Ponzi scheme. However, while Shavers was accepting investments in Bitcoin, Bitcoin Wallets appears to have been accepting cash, and it’s unclear whether any of it was actually being converted into the cryptocurrency. 

Mbatha’s whereabouts are reportedly currently unknown. One source quoted by Times Live said that he is thought to have fled the town.