$50 Million Bitcoin Scam Investigated By South African Police

27,500 people have lost their bitcoin in one of the biggest scams that has ever taken place in South Africa. South African authorities have launched an investigation to find out the perpetrators behind the fraud.

It has been reported that investors have deposited varying amounts of cryptocurrency into a single wallet in the Bitcoin investment group, BTC Global. Weekly returns of 14% of their investments were promised by the company.

Captain Lloyd Ramovha, spokesperson for Directorate for Priority Crime Investigation, confirmed that authorities are trying to track down the culprits that devised the crime, as they violated the Financial Advisory and Intermediary Services Act. It has yet to be confirmed whether the scammers involved are South Africans or not.

Even though a small number of the investors made some revenue in the initial phases, investigators claimed that thousands of people lost all their holdings after the company dissolved in February, in a way that is particular to Ponzi schemes. Some of the victims include people that have invested their entire life’s savings.

Mike Bolhuis, a private investigator whose specialty is investigating economic crimes also assured victims that the scammers will be brought to justice. He also instructed people who have lost their money in this scheme, to open up cases of fraud at the police station, as it will help the investigation process.

This incident confirms the belief that fraudsters use the advantages provided by the anonymity of cryptocurrency transactions to subvert the system.

Microsoft founder, Bill Gates who is skeptical about Bitcoin’s  anonymity clause, has said that Bitcoin’s anonymous characteristic will impede the government’s ability in handling money laundering, terrorist funding, and tax evasion.

In an effort to prevent similar incidents from happening, countries such as China and South Korea have banned trading anonymously with Bitcoin, and have issued laws that obligate exchange and trading companies to verify their customers; laws that are meant to offer some level of protection to investors.

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