In recent years, there has been a rise in cryptocurrency scams across South Africa, with victims losing millions to fraudulent scams. As the industry is still relatively new, it opens up an avenue for scamsters to prey on uneducated people on the subject matter.
There are various types of scams currently operating in South Africa that demand payment in cryptocurrencies. One of the reasons for this is due to the anonymity of cryptos. However, many local scams, provide exchange information that can be traced to an owner of the account.
Richard de Sousa, the Senior Partner at AltCoinTrader, says, “Everyday we see new scams involving promises of huge returns coming up. Also, Ponzi schemes operate on the basis that you need to get more people or friends in it. That should be the first indicator of a red flag.”
Schemes that operate on the basis that you need to recruit more people that gives promise to a higher return for an individual that does, is usually a sign of a pyramid scheme. It gives an opportunity for investors to question its legitimacy, if there is no more recruiting, how would the scheme pay its investors out. We have recently seen how some owners of local scams have been probed by authorities over illegal runnings, leading to the scam not only collapsing as expected but also losing millions of investor capital with it.
De Sousa says, “Some fraudsters give out their exchange Bitcoin address details, and as a result, investors will deposit their money into these accounts. As the exchange will have details of the owner of the account as per FICA law, it can be traced back to the person that holds the account. The exchange, however, will not have owner account information of another wallet that the money will get transferred to after it has left the exchange’s wallet.”
Many people usually will have proof that they have deposited their money into an exchange’s account, and think that they deposited directly to the exchange itself. However, what usually happens is the fraudster has given them the details of their personal exchange account, so the deposit will be received into the scammers account on the exchange.
Another scheme to be aware of is promises of Automated Robots, that can make money for investors. People are being lured on this premise that Automated Intelligence software is working on their behalf to give crazy returns.
Some fraudsters could also pose as extensions of a specific exchange that they need people to deposit in. Be vigilant of that as exchanges don’t usually have employees on the ground who are promoting any schemes that offer any specific monthly return. Exchanges usually only operate online and is a medium that allows people to buy cryptocurrencies. As a result of this, exchanges accept deposits, in Rand or Crypto and hold or allow withdrawals in both Rand or Crypto. Exchanges do not ever promote any guarantee of any sort of high returns.
“People need to start educating themselves more on the topic, considering they are parting ways with their hard-earned cash. AltCoinTrader, has a landline number on our website, so you can call in to double-check if a person is claiming that they promoting a scheme that is being offered by the exchange,” concludes de Sousa.