On May 25, 2018, South African authorities announced further information of an ongoing investigation of a cryptocurrency scam that has cost investors one billion rands ($80 million).
False Claims and Investor Pitfalls
According to Reuters, South African police mentioned that the investigation involved BTC Global, a cryptocurrency trading company. The cryptocurrency company told clients they would earn substantial returns starting with two percent per day, to 14 percent a week, and eventually 50 percent in a month.
On BTC Global’s website, they stated that they suspended their services. The note on the site lists Steven Twain as the company’s “primary trader.” The website also stated that “until Steven Twain resurfaces or is found there is nothing the admin team can do.” The admin team left Steven’s contact details. While Reuters reached out to Twain’s email address, they received no response.
South African police mentioned that “members of the public are believed to have been targeted as part of the scam and encouraged by agents of BTC Global. Some of the investors got paid in terms of the agreement. However, the payments suddenly stopped.”
More important is the fact that BTC Global had already scammed cryptocurrency investors for more than $50 million by March 2018. Related reports indicated that investors “should have seen that BTC Global was a scam from a mile away” since their unusually high returns are similar to other cryptocurrency scams like Bitconnect.
“This may prove to be the tip of the iceberg with potentially thousands more yet to discover they’ve lost money,” said Yolisa Matakata, a police investigator on the BTC Global Case.
BTC Global Suspends Services
According to the BTC Global website, the “payment info was sent to Steven Twain on Sunday 18 February 2018 as has been done by the admin team each week since last year. Steven did not acknowledge receipt of the information. Steven has not contacted anyone in leadership or admin team. No payments have been made by Steven. The admin team cannot locate him. If anyone has any information on how we can get in contact with him, please get in touch and let us know.”
“We are as shocked and angry as everyone. But we all knew the risks involved in placing funds with Steven. We all became complacent with Steven. And all of us funded him independently.”
A reported 27,000 people were scammed in the heist. While many South Africans were involved, there are reports of other international victims from the United States and Australia. South Africans did, however, lose between 16,000 to 1.4 million rands ($1,280 to $112,000).
Do Your Due Diligence
While many cryptocurrency scams can be very convincing, even novice investors should have been privy to all the red flags on BTC Global’s website. By bringing back an archived version, Mybroadband, a regional technology news site, deconstructed the website. They commented that the extremely high returns, referral commissions, and poor web design were factors retail investors should have noted before investing in the company.
Furthermore, the fact that BTC Global only has one image of their “master trader” drinking a vanilla milkshake is a far cry from any sort of financial legitimacy. There is also very little information online concerning Twain’s background knowledge and trading experience.