Probe into Bitcoin Ponzi scheme
The investigators believe that a company called BTC Global duped more than 26 000 South Africans into buying Bitcoin and got them to hand over their cryptocurrency to invest in return for dividends of 14% a week.
Investors had to buy a minimum of $1 000 Bitcoin (R12 000 - it traded between R12 and R14 last year), open an online account with BTC Global and transfer the Bitcoin into its online “wallet address”.
Investors were told that BTC Global was the marketing arm of Steven Twain, a binary, forex and commodities trader, whose access to the latest cutting-edge trading tools and his “extensive experience” meant he was able to “win in a market that crushes most newcomers”.
While early participants of the scheme made money, investigators said thousands of people, some of whom had invested their pensions and life savings, had lost everything after the scam came crashing down in February - in typical Ponzi fashion.
Investigators are now probing hundreds of documents, e-mails and chat conversations in an effort to trace the masterminds behind BTC Global, who they believed have roots in South Africa, but whose tentacles apparently stretch into Europe, Asia, Australia and New Zealand.
One of the many who lost money in the scheme was a Durban woman, who did not want to be named. She invested in the scheme in December last year and lost $2 000 (R24 000).
She reported the matter to the Directorate for Priority Crime Investigation, also known as the Hawks, in Pretoria and compiled an affidavit, of which the Daily News has a copy.
The woman told the Daily News that signing up to BTC Global was simple.
“No Fica (Financial Intelligence Centre Act) was necessary. The accounts opened with BTC Global did not require any identification whatsoever. The name of the account could be Mr X and it was acceptable. This also makes it difficult to trace investors as only they have their passwords to their accounts.
“I was not aware at the time of my signing up as I had provided my correct details,” she said.
The woman said she was able to get the account numbers for more than 26 000 investors and believed more invested after she downloaded their information.
“If the system crashed, as it now has, investors have no recourse as there is no bank, no documentation (and) no one to hold liable,” she said.
Mike Bolhuis, a specialist private investigator who investigates economic crimes, said he and a team of investigators were poring over e-mails, documents and other clues in an effort to identify the masterminds.
He said they had identified some suspects in South Africa and believed that others lived outside the country.
He said he received dozens of calls daily from people who had fallen victim to the scheme.
According to Bolhuis, BTC Global had broken a raft of laws, including the South African Companies Act and the South African Banks Act, for accepting investments without proper registration.
He said the offering or guaranteeing of these extremely high monthly incomes or interest could also constitute a contravention of the South African Consumer Protection Act.
“If the return on investment is too good to be true, it usually is,” Bolhuis said.
In addition, Bolhuis said his investigation had established that Steven Twain did not exist.
“If one would search for any evidence of someone called Steven Twain being in charge of BTC Global, you would never find that person. What you would find is a character called by that name. BTC Global has no ownership details. The funniest thing is that the so-called Steven Twain cannot even prove his trading background,” he said.
Bolhuis said he and his investigators were compiling a dossier of cases and possible suspects which they planned to hand over to the Hawks.
“Our advice now is for people who have fallen victim to this scheme, to open up cases of fraud at the police station and get in contact with us so that we can add it to the files we have. We are going after those responsible and we know they are feeling the pressure,” he said.
The Daily News sent the Hawks questions on Monday. At the time of publication, they had not responded.