What can I say? When it rains it pours and clearly, we've broken the seal and the FUD gates are now wide open. In the last week, we've seen major FUD'ing in the form of the Verge Hack and the Bitcoin Gold Hack and the week is barely over and we've been hit again.
I think John Oliver provided an apt description of cryptocurrency and blockchain when he said its "Everything you don't understand about money combined with everything you don't understand about technology" and for most investors getting into the space its true. The attraction of this amazing internet money making headlines recently has caught the attention of more and more people and with it scammers.
In the spotlight now is BTC Global a blatant Ponzi scheme that has up and disappeared. We haven't seen a cryptocurrency claimed Ponzi scheme belly up like this since Bitconnect.
BTC Global
South African authorities are investigating an alleged cryptocurrency scam that defrauded investors of R1 billion ($80 million) with promises of huge returns that never materialised with more than 28‚000 investors are believed to have lost money.
The fraud investigation involves a company named BTC Global, which told clients they would earn 2% per day, 14% a week and 50% in a month, the police said.
A search for the company on the internet showed its services had been suspended. The website lists Steven Twain as the “primary trader”. A request for comment by Reuters sent to an email address listed on the website as belonging to Twain received no response.
“Members of the public are believed to have been targeted as part of the scam and encouraged by agents of BTC Global,” the police said in a statement.
“Some of the investors got paid in terms of the agreement. However, the payments suddenly stopped.”
BTC Global isn't only tied to South Africa with investors all over the world having lost more than $50 million in this ponzi scheme. Some victims claim to have lost up to $117 000 in the scheme.
Building a case against BTC Global
The Hawks encouraged members of the public who invested in the scheme to come forward.
“This may prove to be the tip of the iceberg with potentially thousands more yet to discover they’ve lost money. There is a timely reminder that unregulated, unusual investments at home or abroad come with a high risk that people could lose all their hard-earned pension and other savings," the Hawks said in a statement.
“Despite the setback, we want to assure the affected individuals that we are investigating the matter but due to the large volumes, it will take time to conclude."
Contact the Hawks
Colonel SP Magobosha and René Engelbrecht on 0827782823 or 0123387500/07 or alternatively email MagoboshaS@saps.org.za and EngelbrechtRene@saps.gov.za
Community support
If you were an investor in BTC global and would like additional support check out this medium post by Jessie Holmes and reach out the extended community
How Does BTC Global Work?
BTC Global promises guaranteed weekly interest rates of 14%, daily earnings, automatic reinvesting, and “complete transparency on investments.”
The world’s best hedge funds generate returns of about 20% per year. They’re backed by the world’s best traders and the most advanced trading software, and they invest in assets all over the world. So how does BTC Global claim to beat every other investment company in the world? How can they guarantee returns of 2% per day or 14% per week?
This is where BTC Global gets vague. The company doesn’t claim to offer any products or services. They don’t claim to invest in anything. Binary options are vaguely mentioned on the official website – although even the best binary options traders don’t earn 14% returns per week.
Based on everything we can see on the BTC Global website, they appear to be a Ponzi scheme or high yield investment program (HYIP). Advertising ROIs of 14% per year is unheard of – advertising ROIs of 14% per week is impossible for any legitimate business.
In addition to their Ponzi scheme investment program, BTC Global advertises a referral program. You can make money by referring other people to the platform. You earn 4% of each referred member’s investments.
Who’s Behind BTC Global?
BTC Global was created by Steven Twain, described as a “master trader” with 6 years of binary options trading experience. No other team members are listed. We don’t know where the company is based, or why they’re qualified to handle your investments.
There’s limited information about Steven Twain available online – so it’s hard to verify his claims of being a “master trader”. His Facebook profile lists his location as New York City, and claims he studied at Miami Dade College. His Facebook profile appears to exclusively focus on promoting BTC Global, and it may have been created exclusively for that purpose.
The company behind BTC Global refers to itself as BTC Financials.
Civil Action Lawsuit
As it always goes with scams of this kind the head instigator is nowhere to be found. The so-called "Steven Twain" seems like never existed in the first place. However from what I can tell in BTC global chats is that they have identified 4 key promoters who they will seek to go after for restitution. This will probably lead to a civil suit similar to the ones issued against infamous lending platform Bitcoinnect
YouTubers/Promoters who benefited from referral income have been targetted and served but there has been very little on when they will appear in court thus far.
Blame the mechanism, not the underlying asset
Since this scam broke I've had chattering about how cryptocurrency is bad and needs to be regulated and I'd just like to take a second to set this straight. There is absolutely no evidence showing that BTC Global was affiliated with the use and trade of any cryptocurrency, they clearly just used the acronym of Bitcoin to lend it some credibility.
It was your typical multi-level market ponzi scheme and had no real affiliation with cryptocurrency whatsoever. I'm not sure why when scams like these break we blame cryptocurrency and not the insitutiaton and concept of MLM itself which is synonymous with being a masquerade for a scheme.
When MLM's do unravel to be Ponzi schemes in the past we don't blame the money or the product we blame the poeple and the organisation structure so why when crypto is involved it takes all the blame?
Decentralised TV also covered the story
My thoughts on BTC Global
If someone promises to pay you 2% returns on investment every day, guaranteed (MAJOR FLAG WORD), then you’re being scammed. There are no exceptions to this rule. BTC Global guarantees weekly returns of 14%, which means you would be able to turn $1,000 into $910,000 in just one year. That’s just not possible in ANY industry or investment product.
Making things look even worse for BTC Global is the fact that the company refuses to explain any of its investment returns. They don’t claim to invest in anything, for example, and the company offers no products or services.
Also when I see the amounts people lost in schemes like this and bItconnect I have to say the scheme cant fully be blamed. There is an element of greed and personal responsibility involved here and in any investment, you should try to protect your downside and not leave yourself openly exposed.
Stay safe out there guys and make sure you do your research and never invest more than you're willing to lose.
Have your say
What do you think this will do to prospective cryptocurrency investors in Africa? Will it give cryptocurrency a bad rap in the country? How do we educate investors on how to evaluate an opportunity?
Drop me a comment and let me know what you think!
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