News / Local
Bitcoin pyramid scheme collapses
05 Sep 2021 at 01:52hrs | Views
INNOCENT Matongo, a Zimbabwean expatriate worker based in Boksburg, South Africa is ruing the day he decided to latch on to a get-rich-quick scheme.
After investing thousands of United States dollars in a pyramid scheme over the last few months, he was expecting the biggest pay-out of his life last month.
But just before he was due to receive the huge pay-out, everything collapsed spectacularly in front of him.
"It's hard to believe but it is what it is," he told The Sunday Mail.
"We were duped big time; the pain is unbearable because I lost a fortune.
"Imagine I was expecting a pay-out of US$20 000 on August 15, that was around the time we usually got our money reflecting in our accounts."
Matongo is among the hundreds of Zimbabweans who have been left counting their losses after a cryptocurrency pyramid scheme in which they had invested more than US$5 million collapsed like a deck of cards last week.
A Zimbabwean man using the alias Martin Mhlanga, who ran the Crypto Share Investment Scheme in South Africa, last week disappeared without a trace, leaving scores of "investors" in a lurch.
Mhlanga had, over the last year, pooled together hundreds of gullible clients under the scheme, promising them implausible returns on their investments.
The investors were asked to pay an initial joining fee of US$30 and a US$300 initial instalment that was then given to the individual who would have referred the new investor.
Many of the investors began sensing that something was not right last week after all the scheme's WhatsApp group administrators left their groups abruptly without notice.
Crypto Shares had more than 50 WhatsApp groups in operation prior to the scheme's dramatic collapse.
The Sunday Mail has gathered that trouble began on September 1 when a group of investors were supposed to receive their money.
Mhlanga became evasive, giving the investors one excuse after another.
That is when it dawned on many that they had been scammed.
Victims of the scam have now set up several WhatApp groups where they discuss how to recover their money or track down Mhlanga.
Matongo later on added this reporter onto one of the groups - CryproShares 16 - where most of the participants admitted to be in financial distress.
One group member, with username Edina, claimed to have invested US$10 000 in July and was yet to receive her first payout.
"I took all the money that I had saved and invested after convincing my husband that this might be our jackpot, but now we are at loggerheads. He says he wants the money back."
She said she now fears for her marriage.
Others claimed to have contemplated suicide after news of Mhlanga's disappearance started circulating on social media.
Some claimed they sold their houses, while others took massive bank loans in order to raise their initial "investments".
While most are already counting their losses, there are some who are still in denial, hanging on to the hope that their pay-outs will hit their bank accounts this week.
Another victim, who spoke to this publication on condition of anonymity, said she had sold her car in order to join the scheme.
"I am a Zimbabwean who is based in South Africa.
"I was supposed to get my first pay-out in August, but now Mhlanga is nowhere to be found," she said.
"I sold my car for US$5 000 and took a US$10 000 loan to make it US$15 000, hoping to double the amount.
"Mhlanga kept coming up with different ideas where people would invest as much as US$1 000 per week and they were promised to get a profit of US$2 000 after two weeks."
Little hope for recovery
Lawyer and crypto-currency enthusiast Mr Amos Nhere said it was unlikely that the fraudster was using his real name, making it difficult for authorities to track him down.
"If the investors were promised shares it might make sense to open a fraud case with authorities," said Mr Nhere.
"Investors should lodge complaints with stock exchanges so they can seize funds or report him to the police.
"This is fraud but the problem is that it is highly unlikely that he was using his real name and no one knows who he is.
"It's a bit complex."
National police spokesperson Assistant Commissioner Paul Nyathi said cases of cyber fraud were on the increase.
"Cases of people being duped of their money are now rampant," he said.
"This issue of cyber fraud is on the increase hence the need for people to be vigilant.
"An increasing number of people are losing their hard-earned money to these criminals."
Elaborate
Scammers usually use elaborate tactics to gain the trust of their victims in order to defraud them of their money.
The scammers promise big returns, which are usually paid to the early entrants.
The schemes however, eventually collapse as the number of current investors outstrips that of new entrants.
Experts say the only "constant" in such schemes are the gullible investors who are blinded by the promise of quick riches.
Attempts to contact the scammer on his South African registered mobile number failed: his phone is unavailable.
His company also has no known physical address as he usually communicated with his investors virtually via WhatsApp and other electronic platforms.
A pyramid scheme is a scheme under which a person makes a payment to get the right to recruit others into the scheme for which they receive an income.
The new recruits also make payments to get the right to further recruit others and in turn receive incomes for recruiting others.
Over a period of time, a hierarchy of participants resembling a pyramid is formed with the introduction of new recruits, and increased number of participants to the scheme.
After investing thousands of United States dollars in a pyramid scheme over the last few months, he was expecting the biggest pay-out of his life last month.
But just before he was due to receive the huge pay-out, everything collapsed spectacularly in front of him.
"It's hard to believe but it is what it is," he told The Sunday Mail.
"We were duped big time; the pain is unbearable because I lost a fortune.
"Imagine I was expecting a pay-out of US$20 000 on August 15, that was around the time we usually got our money reflecting in our accounts."
Matongo is among the hundreds of Zimbabweans who have been left counting their losses after a cryptocurrency pyramid scheme in which they had invested more than US$5 million collapsed like a deck of cards last week.
A Zimbabwean man using the alias Martin Mhlanga, who ran the Crypto Share Investment Scheme in South Africa, last week disappeared without a trace, leaving scores of "investors" in a lurch.
Mhlanga had, over the last year, pooled together hundreds of gullible clients under the scheme, promising them implausible returns on their investments.
The investors were asked to pay an initial joining fee of US$30 and a US$300 initial instalment that was then given to the individual who would have referred the new investor.
Many of the investors began sensing that something was not right last week after all the scheme's WhatsApp group administrators left their groups abruptly without notice.
Crypto Shares had more than 50 WhatsApp groups in operation prior to the scheme's dramatic collapse.
The Sunday Mail has gathered that trouble began on September 1 when a group of investors were supposed to receive their money.
Mhlanga became evasive, giving the investors one excuse after another.
That is when it dawned on many that they had been scammed.
Victims of the scam have now set up several WhatApp groups where they discuss how to recover their money or track down Mhlanga.
Matongo later on added this reporter onto one of the groups - CryproShares 16 - where most of the participants admitted to be in financial distress.
One group member, with username Edina, claimed to have invested US$10 000 in July and was yet to receive her first payout.
"I took all the money that I had saved and invested after convincing my husband that this might be our jackpot, but now we are at loggerheads. He says he wants the money back."
She said she now fears for her marriage.
Others claimed to have contemplated suicide after news of Mhlanga's disappearance started circulating on social media.
Some claimed they sold their houses, while others took massive bank loans in order to raise their initial "investments".
While most are already counting their losses, there are some who are still in denial, hanging on to the hope that their pay-outs will hit their bank accounts this week.
Another victim, who spoke to this publication on condition of anonymity, said she had sold her car in order to join the scheme.
"I am a Zimbabwean who is based in South Africa.
"I was supposed to get my first pay-out in August, but now Mhlanga is nowhere to be found," she said.
"I sold my car for US$5 000 and took a US$10 000 loan to make it US$15 000, hoping to double the amount.
"Mhlanga kept coming up with different ideas where people would invest as much as US$1 000 per week and they were promised to get a profit of US$2 000 after two weeks."
Little hope for recovery
Lawyer and crypto-currency enthusiast Mr Amos Nhere said it was unlikely that the fraudster was using his real name, making it difficult for authorities to track him down.
"If the investors were promised shares it might make sense to open a fraud case with authorities," said Mr Nhere.
"Investors should lodge complaints with stock exchanges so they can seize funds or report him to the police.
"This is fraud but the problem is that it is highly unlikely that he was using his real name and no one knows who he is.
"It's a bit complex."
National police spokesperson Assistant Commissioner Paul Nyathi said cases of cyber fraud were on the increase.
"Cases of people being duped of their money are now rampant," he said.
"This issue of cyber fraud is on the increase hence the need for people to be vigilant.
"An increasing number of people are losing their hard-earned money to these criminals."
Elaborate
Scammers usually use elaborate tactics to gain the trust of their victims in order to defraud them of their money.
The scammers promise big returns, which are usually paid to the early entrants.
The schemes however, eventually collapse as the number of current investors outstrips that of new entrants.
Experts say the only "constant" in such schemes are the gullible investors who are blinded by the promise of quick riches.
Attempts to contact the scammer on his South African registered mobile number failed: his phone is unavailable.
His company also has no known physical address as he usually communicated with his investors virtually via WhatsApp and other electronic platforms.
A pyramid scheme is a scheme under which a person makes a payment to get the right to recruit others into the scheme for which they receive an income.
The new recruits also make payments to get the right to further recruit others and in turn receive incomes for recruiting others.
Over a period of time, a hierarchy of participants resembling a pyramid is formed with the introduction of new recruits, and increased number of participants to the scheme.
Source - sundaymail
