How naive natives fall for Bitcoin ponzi schemes in South Africa 

Bitcoin scams are all over the place, none more so than in less educated third world countries like mine. South Africa has its own share of ponzi schemes being run as get-rich-quick projects. The first one I heard of is called Bitcoin Revolution though I think that scam has offices globally. Through astute advertising the scammers take the face of celebrities specifically from the country they are targeting and place words in their mouths on online ads, even photoshopping some TV studio imagery behind the celebrity to make it look as if he is in a studio. They even used the president of South Africa’s face, saying he endorses the scheme, along with other celebrities like Trevor Noah, a black South African stand-up comedian who made it to the big time when he became the host of the Daily Show on American TV.

Well, I found another classic ponzi scheme running out of a shabby run down little building in the heart of Zululand, in a town called Ladysmith. It’s called Bitcoin Wallet. Thousands of local Africans have been captivated by the allure of instant riches. The scammer is advertising 100% profit in two weeks and locals are lining up in long queues to give away their money in the hope of doubling it. In fact they are sleeping in the streets outside the building overnight in the cold winter months, just to keep their place in the queue outside the run down office that used to be a pawn shop.

In a report from a local online news outlet (https://www.iol.co.za/news/south-africa/kwazulu-natal/ladysmith-cops-probe-bitcoin-wallet-ponzi-scheme-allegations-28647885) the saga is presented, fortunately with skepticism by the more educated media, yet the thousands of others are totally bewildered by the fast returns on their investments. The police are investigating the situation as a fraud case but the perpetrator has yet to be arrested. The scammer is taking the money and allegedly buying Bitcoin, telling the locals he will give them double back in two weeks. Anyone who has invested in, traded with or studied Bitcoin knows that this kind of return is unsustainable at best and downright illusory or a blatant impossibility at worst. Otherwise global investors would be shouting it from the Youtube channels like they do their other returns.

In the parabolic bull run of December 2017, when I first got involved in trading Bitcoin as a novice, I remember doubling my one investment one week, but that wasn’t all my trading capital, just a part of it invested in that particular trade on the day. And then the bear market came and I was never able to achieve that again for the rest of 2018. Now the bull market is admittedly back, and Bitcoin has climbed over double in value over the past months, but not all month, every month, what to speak of in two weeks. Not even the most skilled trader has been able to show that kind of returns, or predict the bull runs from bottoms to tops repeatedly. There are sometimes retracements.

One person even said that they heard reports of the so-called “investor” doubling his money in three hours. Apparently there are 2500 people who go to the ponzi storefront every day, wait in the queue for days on end, sleeping in the line in the cold. As a result lots of “side hustles” have sprung up, where you can pay $12 to warm yourself at the fire, $3 to get a blanket, $1 to just ask where the queue ends so you can join it, or $40 to hire a homeless person to stand in the queue for you to keep your place. And this is in a country where the local currency, the Rand, is ZAR14,50 to the dollar. And the hourly minimum wage is around $1,50.

With reports of thousands of people camping out there now, which sounds bizarre and hard to believe, the municipality has called for a meeting to address the cleanliness issues and blockage of all the other businesses in the street. As they say here TIA - “this is Africa”. There are even reports that you can 10x your money in two weeks. That’s 1000% return, and people are believing it and flocking with their savings. Recent reports say that the scammer has left the building, possibly due to municipality requests, and is now operating online “to eliminate long queues”. You can’t make this stuff up here in Africa.

The conman doesn’t bank his money in a formal bank, otherwise authorities would pounce on him apparently, so how he buys his Bitcoin I don’t know, since you need to send the fiat via EFT from a bank account to the local exchanges here that accept ZAR. This kind of scheme doesn’t really help the economy but rather destroys it, in a country where the poorest of the poor are living in 30% unemployment and rampant crime and violence daily.

Someone apparently looked at his certificate that is presented as validating his position and agreed that it’s a fraud, so there is no doubt, yet the locals are easily bewildered by the allure of things like ponzis, faith healers and miracle workers here. I don’t even want to start with the criminal behaviour of evangelical “prophets” as they call themselves here, messing with people’s lives in the name of religion. Superstition is alive and well in darkest Africa, even in a land of smart phones and internet at your fingertips.

#politics #bitcoin #ponzi #africa