Thousands of Ladysmith residents, pulled by the lure of easy money and big returns, have invested large amounts of money with a company called Bitcoin Wallet.
Residents have been queuing and sleeping overnight outside the offices of the company in the Ladysmith CBD for the past few weeks waiting to invest their money.
The police confirmed on Wednesday that it was investigating a possible Ponzi scheme operating in Ladysmith, but would not confirm if it related to Bitcoin Wallet.
Police spokesperson Captain Nqobile Gwala said a case of fraud was under investigation by Ladysmith police.
The Mercury could not reach the owner of the company yesterday but African News Agency (ANA) reported last month that the company is run by Sphelele “Sgumza” Mbatha.
ANA reported, in an interview with a community radio station, that Mbatha said his business was above board. He said the deposits made into his Bitcoin Wallet were taken and re-invested in bitcoins.
He said after some time he cashed in from the cryptocurrency by simply selling it back to the market at a higher price.
A video has been circulating on social media showing a woman placing several R200 notes, running into a few thousand rand, on top of a car and saying that it was money she earned from Bitcoin Wallet.
A community member, aware of the business, said people wait for days in hopes of doubling their money. “From what we have heard, Bitcoin Wallet is an investment, not a pyramid scheme.
“He (the owner) has spoken in the media, that he invests the money in bitcoins and is able to double that money within three hours.
“If you put in an amount of R100000, you get back an amount of R200000 in 15 days.
“There are about 2500 people who go there every day. The people there today (yesterday) will only be able to get in (to place their investments) on Friday. People are sleeping outside overnight there.”
He said the flocking of people to camp outside the company’s office has sparked “side hustles”.
“If you lose your ID, you pay R100 to get it back (lost and found).
“It’s a R180 to warm yourself at the fire overnight, its R50 to get access to a blanket and its R30 to ask where the queue ends and R500 for a homeless person to queue for you overnight,” he said.
The activities around the business have also concerned the Alfred Duma municipality.
The thousands that camp out daily and overnight have caused traffic problems, people are starting fires overnight to keep warm, there are issues of cleanliness and they are interfering with other businesses.
Municipal spokesperson Siyabonga Maphalala said the municipality has called for a meeting with the owner of the business to discuss among other issues, the violation of municipal by-laws.
“Our legal department is also waiting on him to provide it with documentation that show that he is allowed to trade like this,” he said.