Ladysmith residents are seen gathering in large numbers on Tuesday afternoon outside the offices of Bitcoin Wallet, a questionable investment scheme that promises them 100% profits in 15 working days. File picture: Simphiwe Mbokazi/African News Agency(ANA).

JOHANNESBURG - The Alfred Duma local municipality on Thursday distanced itself from allegations that it had ordered the immediate closure of a popular "investment scheme" that promises to pay out ten-fold returns on cash deposits within two weeks in Ladysmith.

Panic set in on Thursday as hundreds of investors gathered outside Bitcoin Wallet's offices demanding that the scheme's owner address them after they heard that he was moving.

Social media was abuzz with people asking each other whether Bitcoin Wallet had fled with investors' money. Investors have been sleeping outside the scheme's offices and in bushes nearby to be the first in line when the offices open the next day. 

Owned and operated by Sphelele "Sgumza" Mbatha -- a local man who was a paramedic for 11 years until recently -- the investment scheme is reportedly taking millions of rand in cash deposits on a daily basis.

It is said to pay 100% returns on money deposits, starting from R100, in exactly 15 working days. Deposits are reportedly taken and re-invested in cryptocurrency and after some time cashed in by simply selling it back to the market at a higher price.

Mbatha reportedly informed prospective investors and other clients on Thursday that he could not take their deposits as he had to immediately move offices on the instruction of the municipality.

Mbatha did not respond to phone calls, but an advisory on his company's website said it was working on an online system to eliminate long queues. 

"We're working hard to finish the development of Bitcoin Wallets. Our target launch date is Saturday 6th July 2019! We could not continue working on the premisses (sic) due to reasons beyond our control, we are now operating online!" the advisory said.

Municipal spokesperson Siyabonga Maphalala told African News Agency but phone that the council had called Mbatha into a meeting to inform him of various complaints made by other businesses within the precinct, including the violation of by-laws.

Bitcoin Wallet offices are located in a shabby building that used to be a pawn shop in the Ladysmith central business district.

"We could not sit and fold our arms when many businesses in the area are complaining about his clients that they block their driveways. We had to act," Maphalala said. 

"We did not even give him a letter instructing him to vacate the premises or close down. We did not do that. We merely gave him a chance to find new premises from which to operate at his convenience."

Bitcoin Wallet will reportedly now operate from Mavelempini, across from the department of public works offices in Ladysmith.

Reports emerged on Thursday morning that Ladysmith police were investigating the company for running a possible Ponzi scheme after a case of fraud was opened by a member of the public.

 African News Agency (ANA)