Angry members of the community and fed up investors on Wednesday allegedly set alight a home belonging to the family of the owner of an apparent Ponzi scheme in Tsakane township, Ladysmith, in KwaZulu-Natal after its collapse.

A series of events began on Tuesday night after Sphelele “Sgumza” Mbatha announced on a local radio station Nqubeko FM that the Bitcoin Wallet’s website was allegedly “hacked” and investors’ monies had been paid into fraudulent accounts after it had decided to try its hand at trading online.

Ladysmith police station inundated

Hundreds of people started flocking to the Ladysmith police station after messages circulated on social media that Mbatha had been taken to custody after trying to make a run for it with people’s money. But police said there was no truth in the rumour that Mbatha had been arrested.

For months now, Mbatha’s Bitcoin Wallet has caused a stir in Ladysmith by promising to pay 100% returns on monetary deposits in only 15 working days.

Mbatha had built a reputation for liking the finer things in life, carrying large sums of money and dolling out R100 notes in cash to anyone who gave him a chance on the streets and malls, even throwing lavish parties and paying for other people’s grocery bills.

Mbatha’s unusual actions earned him the nickname “Lord of Ladysmith” as people began to see him as their answer out of poverty, saying he must be protected.

The allure of easy money had seen more and more hopeful people depositing their money into the investment scheme, with some investing as much as R100,000 in cash or more at a time.

Ladysmith ‘bitcoin wallet’ scheme

The popularity of Bitcoin Wallet and its hefty payments saw hundreds of people flocking to Ladysmith from all corners of KwaZulu-Natal and even beyond, some even sleeping outside the premises to be first in line the following day.

But this caused disturbances and resulted in municipal by-law violations, forcing Mbatha to close down and to reportedly start trading online to avoid traffic into his business premises.

Mbatha had claimed that the deposits made were invested in cryptocurrency Bitcoin and cashed in after some time by simply selling it back to the market at a higher price.

But after claiming on radio that his business website had been hacked, community members and investors became restless, looking for Mbatha so that they could at least get back their initial investments, even if it was not with the promised profits. But Mbatha has been nowhere to be found.

Over the weekend, local newspaper, the Ladysmith Gazette, also reported that Mbatha had admitted that he doesn’t have any more cash to pay out to clients and that he said he was just a manager, not the owner, of the investment scheme.

House gutted by flames

On Wednesday morning, the angry mob gathered outside Mbatha’s parental home in Tsakane where some looted the furniture inside, and proceeded to set the house on fire, with a luxury BMW parked in the garage. Nobody was at the house at the time and no injuries were reported.

Both the Ladysmith Gazette and Nqubeko FM have been reporting about these developments throughout Wednesday, with various videos of the incidents being circulated on Facebook and other social media platforms.

The African News Agency (ANA) has been seeking police comment on the latest developments without success, but an affidavit is being circulated which urges investors to report the matter to the Pietermaritzburg Commercial Crime Investigation Unit.

By African News Agency (ANA), Editing by Lindiz van Zilla.