Legal and regulatory authorities around the globe are taking a closer look at the cryptocurrency industry. One of the latest investigations is taking place in South Africa. At the end of May, authorities launched an investigation into allegations of fraud that has resulted in a loss of $80 million in bitcoin from around 30,000 investors. The fraud allegations were levied against BTC Global and its fund manager Steven Twain. While it would have been effective to question Twain, it seems that he is on the run.
According to BTC Global, it provided in a recent statement,
“The admin team cannot locate [Steven Twain]. If anyone has ANY information on how we can get in contact in contact with him please get in touch and let us know. Until Steven Twain resurfaces or is found there is nothing the admin team can do.”
Additionally, the statement features a requests for threats against the team leaders and admins to stop and that as an alternative, they may want to consider legal proceedings. The admin staff had funded their run-away manager and that the staff were still missing a week’s worth of pay.
Authorities released a statement of their own, which is as follows:
“Members of the public are believed to have been targeted as part of the scam and encouraged by BTC Global agents to invest with promises of 2 percent interest per day. 14 percent per week and ultimately 50 percent per month.”
This type of structure is indicative of a ponzi scheme. For those who are unaware, such a scheme is akin to a pyramid. It is a business model that requires a constant expansion of a supply of new members. Such schemes are illegal in many countries because they tend to lead to massive profits at the top of the pyramid and no revenue at the lower tiers. The new members tend to make no value on the scheme.
Those observing the investigation from the outside express concerned about the company after looking into the founder. SEO Spark, for example, conducted a review of BTC Global and determined that the fund manager sounded “impressive” and that there was no evidence to support a single claim against him.
Further, according to the review,
“This turns BTC Global Team into a Ponzi scheme, and as the story goes, the company will shut down and collapse once investment activity inevitably dies down. Once this happens, the anonymous admin(s) will make off with the majority of the earnings most all [sic] affiliates will lose out, and that’ll be the end of it.”
The issues continued in February, when security specialist Mike Bolhuis posted a report on Facebook about BTC Global. In his post, he stated
“These guys have not been trading since there is no evidence of trading activities at all.” Further, “They have been running a full blown pyramid scheme where payment is accepted in Bitcoin and members are promised revenue that they will never earn.”
BTC Global is not the only financial company making headlines in South Africa. Recently, Katlego Marite was kidnapped and a ransom request involved bitcoin. Ultimately though, the three suspects responsible for the kidnapping were taken into custody. Further, South Africa’s central bank recently announced its plans to establish a self-regulatory organization for cryptocurrency. The purpose of the move was to reduce the risk of scams and malpractice, while also promoting innovation. Those who are interested in continuing developments concerning BTC may want to view South African news outlets, which see this story as a hot topic.