Update: Behind the flashy cars are the Bitcoin Wallets victims – Ladysmith Gazette

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Update: Behind the flashy cars are the Bitcoin Wallets victims – Ladysmith Gazette

Update
Phoenix Durban

The hollow, ashen husk that remains of Sgumza’s family home in Tsakane speaks volumes of just how many unhappy victims there are in the aftermath of the Bitcoin Wallets Ponzi scheme that sprung up in Ladysmith.
However, over and above the anger, frustration, anxiety and even depression expressed by friends and neighbours who lost money in the Ponzi scheme, there is a pitiful, desperate clinging to hope that they’ll get their money back.
ORIGINAL COVERAGE:  Suspected Ponzi scheme believed to have closed up shop

“This is Sgumza. We know him. He wouldn’t do this to his own community,” said some of the ‘investors’. “Maybe he is still coming back with our money. Maybe he will come back and explain what happened.”

The Ladysmith Gazette visited Tsakane recently to hear how the community was affected by the collapse of Bitcoin Wallets. The experiences shared were heartbreaking. It will be some time before Ladysmith recovers.
One self-employed construction worker had reached such depths of depression after taking loans against his business to invest in the scheme that he considered putting a gun to his head and pulling the trigger. He confided that he had been drowning in debt before he had put money into Bitcoin Wallets, and was counting on using the money he got out to pay off his debt and the loan he had taken. The construction worker was supposed to have received his first payout from Bitcoin Wallets on July 12, just a few days after the Ponzi scheme collapsed.
“I have no idea what I am going to do now. I just want to end it all,” he said.
A young bride saving for her umembeso (a Zulu marriage tradition) said she had invested all the money she had saved for the ceremony because she trusted Sgumza.
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“Sgumza’s family is very well respected in the community. His father, who is now deceased, was a pastor in the church and his mother is still an important person in the church. Sgumza has always been generous with money. If he came across someone who was short of taxi fare, for instance, he would try to help you cover the fee. We knew it was a scheme that was going to collapse eventually. He (Sgumza) told us so, but he promised us that the scheme would last until the end of September or beginning of October. That is why we believed it was still safe to put money in. We were all shocked when the business closed its doors. Now I don’t have any money for the wedding,” said the young bride.
A traumatised mother said she had invested money that was intended for food for her children for the rest of the month.
The owner of a small tuck shop said she had invested profits she had been saving to expand her business. While she felt comfortable that she would survive the loss, she knew of residents who had gotten into debt, sold their vehicles, and even one or two who had sold their homes in order to raise the money to invest in Bitcoin Wallets.
“People need to get their money back. They are suffering. I know people who lost their homes. They are now staying with friends. People put their entire pension funds in there. There are people who owe banks and even loan sharks. How are they going to pay the money back?” said the business owner.
One resident said people had tried to warn Sgumza about the dangers of operating a Ponzi scheme, but he became aggressive and refused to listen to them.
Some described him as a hustler who often spent time at the taxi rank playing dice or gambling at a local betting operator. Many spoke of the braais he hosted at his house after he opened Bitcoin Wallets, saying hundreds of community members would attend and there was always plenty of food and alcohol for everyone.
“I don’t think he will ever come back,” said the tuck shop owner. “How is he going to pay the money back? I won’t ever invest in a Ponzi scheme again. Once bitten, twice shy. It is said that the police were also investing in the scheme, so the community no longer trusts the police.”
Clients of Bitcoin Wallets claim that a special queue had been designated for officers in uniform so they would not have to wait. They further allege that police officers who did not have the money to invest in the scheme were given a cash advance from Sgumza that they could pay back when they received their returns. These, as well as claims that certain police officers would take leave to escort Sgumza in state vehicles when requested, were sent to the Ladysmith SAPS communications officer for comment.
Spokesperson Captain Bongani Nyathi responded that he was unaware of any police officers investing in Bitcoin Wallets. He confirmed that a case of arson was opened following Sgumza’s family home being burned down, which was being investigated by the local SAPS.
Hawks investigator Trevor Harding has seen that Sgumza’s Audi R8 was impounded, as it is now considered proceeds from a suspected crime. Affidavits are being collected and will soon be submitted to the Department of Public Prosecutions, which will make a decision regarding an arrest warrant for Sgumza being issued. However, police have been unable to determine his location.
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