Scammers are the bane of the crypto world, and sadly there are more scammers out there than could ever actually be counted. Getting scammed is one of the most frustrating feelings, especially when local law enforcement and the courts don’t care for your case. One group of victims decided to take matters into their own hands by looting and burning down the home belonging to the scammer.
Sphelele Sgumza Mbatha operated a Bitcoin Ponzi scheme, whereby he promised investors a 100% return in just 15 days. As expected, it all turned out to be a huge scam.
Scarily Efficient Ponzi Scheme
Mbatha and his Bitcoin Wallet business operated from a shady part of Ladysmith in a rundown building that used to be a pawn shop. Queues would begin to form outside his office from as early as 3am, as hopeful investors queued up to invest more money or pick up their returns. Towards the end, Mbatha was not accepting investments smaller than 5,000 ZAR owing to the huge popularity of his investment scheme. No payments were ever completed online, it was all done cash in hand directly at the Bitcoin Wallet office.
Living the High Life
After operating for a few months, Mbatha had the entire town hooked on his Ponzi scheme. Allegedly, the scam was raking in 2 million ZAR every day, giving it the largest single-day cash flow out of any business in Ladysmith. Mbatha was given the name uNkulunkulu waseMnambithi – The Lord of Ladysmith – by locals, as he drove around in flashy sports cars with police escorts. The Lord of Ladysmith would frequently throw parties where free-flowing alcohol was available to all attendees.
An Angry Mob and a Big Bonfire
As with all Ponzi schemes, eventually the person behind it can’t keep up with the demand, and eventually takes all the cash and runs off. Late last week, Mbatha announced that his business would be shutting its office and taking everything online. All investors had to do was fill out their details on the new website and everything would run just like it did before. However, a couple of days later news broke over a local radio station that Bitcoin Wallet had been hacked and all funds had been stolen.
— Ladysmith Gazette (@LdyGazette) July 10, 2019
The Financial Services Conduct Authority (FSCA) and National Credit Regulator (NCR) both raised red flags against Bitcoin Wallet, but it appears as if no investigation is or was ever underway. A 1,500 strong angry mob protested outside the local police station, before moving on to Mbatha’s home. Once the mob arrived, they ransacked the house and burned it to the ground.
Questions Being Asked
It’s still unclear as to how Mbatha managed to get a police escort, as the Directorate for Priority Crime Investigations (The Hawks) has no answers when questioned about it. It very much appears as if Mbatha bribed local law enforcement to protect him in case his Ponzi scheme blew up in his face – which it did. Unfortunately. In poverty-stricken rural towns like Ladysmith, police officials are easily bought, meaning scammers and fraudsters can get away with whatever they want. It’s unlikely that the police officers that were bribed will ever answer for their part in the scam.
— Ladysmith Gazette (@LdyGazette) July 13, 2019
According to local media, there is still no warrant out for Mbatha’s arrest – yet another sign of corruption amongst the government services that are supposed to protect investors and the public.
Will Investors Ever Get Their Money Back?
For now, it’s looking like Mbatha has managed to escape with an absolute fortune and will never face up to his crimes. He will likely slink off to another part of South Africa and live out his life quietly with his new-found mass of wealth. If this Ponzi scheme had happened in the United States, Mbatha would already be in a jail cell.