Bitcoin ‘ponzi scheme’ probe

Investors allegedly conned out of nearly R60 million

CLOSE to 1000 investors have been left reeling following the collapse of a multimillion-rand cryptocurrency scam.

IRS Forensic Investigations chief executive Chad Thomas said he was approached by the duped investors to look into several juristic and natural entities allegedly involved in running complex ponzi schemes under the guise of cryptocurrency trading after they were allegedly conned out of about R60 million.

“It is our considered opinion that some of the implicated parties participated in what they believed to be legitimate schemes and only realised later that some of the platforms that they had reinvested in on behalf of third parties were in fact operating illegally in terms of FAIS (Financial Advisory and Intermediary Services) and the Banks Act, in that they were taking deposits, offering unrealistic returns, and in some instances, paying ‘interest’ on capital amounts received,” said Thomas.

Investor and chief complainant Leon van der Waltsleben said close to 1 100 people initially invested with TBC BTC Donation Exchange.

“One person invested R3.2m. People started to learn about him by wordof-mouth because he was good for about the first six months so people kept joining and telling others about it. Now my main concern is that all our money is gone,” said Van der Waltsleben. He claimed he invested with Dawid Dorfling at the end of 2018 by transferring funds into his Bitcoin wallet which he then supposedly put into different platforms.

“Investors made a lot of money for a few months until about June and then suddenly he (Dorfling) started to say he can’t pay because the system was down. Investors just want our refunds back,” said Van der Waltsleben.

Thomas said the group Van der Waltsleben was part of was claiming R40m while another victim, Pieter van der Merwe, was claiming about R2.5m.

Van der Merwe and his wife who heard through word-of-mouth about Dorfling in May last year initially invested about $35 000 (more than R549 000). Responding to the allegations, Dorfling said there were some issues that he “ran into” but would not elaborate on exactly what they were as he did not want to say anything to ruin the cases.

“I am not running anywhere. “I will co-operate, I have been since the beginning. I have a lawyer who has been with me for some time now. “In fact, I have two,” said Dorfling. The Hawks Specialised Commercial Crime Unit in Pretoria is investigating the alleged scam. Hawks spokesperson Colonel Katlego Mogale confirmed that a docket was registered and transferred to Gauteng from Lyttelton.

“The investigating officer indicated that the investigations are at initial stages and most of the information needs to be verified and other provinces consulted as well,” said Mogale.

Thomas said the purchase and trading of cryptocurrency on forex platforms was a complex process.

“Not many people understand the mechanisms of blockchain algorithms and the online trading of cryptocurrency. Because of the Bitcoin phenomena over the past few years, many people have wanted to trade in cryptocurrency but never had the technical knowledge. This opened up an industry for brokers with knowledge of cryptocurrency and the necessary trading software to trade on behalf of investors,” said Thomas.

Thomas said there was an increase in ponzi and affinity scams associated with the supposed trade in cryptocurrency on forex platforms.

“Another cause for concern is that many people are taking advice from experts in the field who themselves may not have conducted proper due diligence on the people that they may recommend as good traders. We saw this in the well-known case of expert Ran Neuner, the host of CNBC CRYPTOTRADER, who allegedly, and, in all probability, inadvertently promoted a convicted fraudster’s trading platform.

“Boaz Manor, who had been found guilty in a $800m hedge fund fraud, reinvented himself as ‘Shaun MacDonald’. The point I am trying to make is even the experts can get it wrong, so always check, double-check, triple-check and research as much as possible before just investing in cryptocurrency investment schemes,” said Thomas.

Cryptocurrency is not regulated in South Africa. However, according to Marius Reitz at Luno (a Bitcoin-related company) they are working with the SA Reserve Bank (SARB) and other regulators around the world.

Crypto transactions are like cash in that they are irreversible.