Connect with us

Bitcoin

Some South Africans Are Struggling With Debt Due to Crypto Investments

Published

on

Debt Due to Crypto Investments

Many South Africans are plunging into debt by investing in cryptocurrencies like bitcoin and ether. Most are hoping to cash in on the volatility experienced in cryptocurrency markets by speculating in different cryptocurrencies. These developments come at a time when bitcoin is trading at around $10,000, down from a high of $20,000 in mid-December 2017. Ethereum’s ether, on the other hand, has dropped to $975 from a high of $1300 in mid-January.

Pervasive Problem of Cryptocurrency Scams

According to Debt Rescue CEO Neil Roets, towards the end of 2017, many South Africans wanted to go under debt review after investing in cryptocurrencies and being unable to service their debts. Some of the victims had gone to the lengths of borrowing money on credit cards, taking out second mortgages on their homes and even pawning their vehicles.

However, the intriguing part is that majority of the debtors are victims of cryptocurrency related fraud. Speaking to MyBroadband, Rotes stated,

“To my amazement, many of them had been the victims of scams involving cryptocurrencies which promised massive returns.”

Africa has had its share of digital currency scams that target unknowing users looking to profit from cryptocurrency speculation. The most common are bitcoin HYIPS and MLM schemes, which have succeeded in defrauding unwitting users in countries such as Kenya, South Africa, Zimbabwe, and Nigeria. These scams operate as Ponzi schemes, where existing investors are paid with proceeds coming from new investors until its no longer tenable and the scheme collapses. At this point, the operators disappear with the funds.

The scammers usually draw people to the schemes with the promise of guaranteed returns and have well-paying referral programs. The reality is when it comes to investments there are no guarantees, there is always an element of risk. Therefore, for South Africans, any bitcoin investment scheme promising guaranteed returns is most likely a scam and should be avoided at all costs. As a general rule of thumb, if it sounds too good to be true then its probably not true.

While a good number of consumers interviewed by Roets for debt counselling were victims of scams, the majority of the losses were as a result of cryptocurrency trading activities. The volatility experienced in the digital currency markets makes it difficult to predict price movements thus traders should only invest what they can afford to lose. New users must first learn more about cryptocurrencies and their underlying technologies before entering the highly volatile markets.

Bitcoin

South Africa’s Central Bank Categorises Cryptocurrency as “Cyber Tokens”

Published

on

South Africa Cyber Tokens

The South African Reserve Bank has made a decision to categorise virtual currencies such as bitcoin as “cyber-tokens” stating that they do not meet the necessary prerequisite to be referred to as money.

While addressing reporters in Pretoria, the Deputy Governor of the Reserve Bank of South Africa, Francois Groepe, said:

“We don’t use the term ‘cryptocurrency’ because it doesn’t meet the requirements of money in the economic sense of the stable means of exchange, a unit of measure and a stable unit of value. We prefer to use the word ‘cyber-token’.”

In addition, the Reserve Bank has now formed a financial technology (fintech) taskforce that will be tasked with reviewing the central bank’s stance on private virtual currencies and help draft a suitable regulatory regime and policy framework.

The decision by South Africa’s central bank comes just two months after the South Africa Revenue Service (SARS), announced their new laws on digital currencies putting them ahead of most African countries that are still struggling to implement laws that govern cryptocurrency use and trading.

Groepe went on to say: “We want to ensure or establish whether there is still compliance with the relevant financial surveillance or exchange-control regulations.”

Not Everyone Loves Cryptocurrencies

Many African governments have been hindering the adoption of cryptocurrencies. Just this week, the Reserve Bank of Zimbabwe banned all cryptocurrency operations in the country forcing Golix – one of the largest cryptocurrency exchange platforms in the country – to take them to court and challenge their directive. Although the ban was lifted by the Harare High Court, it is not yet clear what the next cause of action of the Reserve Bank of Zimbabwe will be.

Zimbabwe is not the only country. The Central Bank of Kenya has also maintained that investing or trading in cryptocurrencies is risky and has continued to warn both local banks and the general public against them. The central bank of Lesotho also told investors earlier in the year that they would not offer any help to anyone in case they lost their money on digital currencies.

Continue Reading

Bitcoin

Zimbabwe High Court Suspends Ban on Cryptocurrencies Set by Central Bank

Published

on

Zimbabwe Court Suspends Ban on Cryptocurrencies

Zimbabwean digital currency exchange Golix will be able to resume operations after the Harare High Court suspended a ban by the Reserve Bank of Zimbabwe (RBZ) that prohibited cryptocurrency operations in the country.

Zimbabwe’s central bank had barred all financial institutions from providing any services to cryptocurrency exchanges terming their move as a step that is meant to “safeguard the integrity, safety, and soundness of the country’s financial system, and to protect the public in general”.

The ruling was made by the High Court after the Reserve Bank of Zimbabwe failed to appear in court following a case that was filed by Golix challenging the country-wide ban of cryptocurrency trading.

In an interview with CCN, Golix’s Communications Manager, Nhlalwenhle Ngwenya, said: “The ban was lifted.” None of the officials at the Reserve Bank of Zimbabwe, including the Governor, John Mangudya showed up for the proceedings at the Harare High Court causing the court to suspend the ban.

“We are hoping that we can immediately go back to doing business and processing the order book,” stated an official from Golix. As the biggest cryptocurrency exchange in the country, Golix was forced to stop its operations and find ways to deal with the directive from RBZ in a notice that was sent to its members.

Relief to Cryptocurrency Exchange Platforms

The ban lift is a relief to both crypto traders as well as investors who will now be able to trade on the Golix or Styx24 exchange platforms. Besides their crypto trading platform, Golix also owns a bitcoin ATM that is located in Harare.

The RBZ had classified operations by cryptocurrency exchanges as illegal in the country. One of the arguments presented to the high court by Golix was that the ban was unconstitutional citing Section 68 while questioning the authority the central bank had in making laws, a function which is meant for the legislative arm of the government, which the RBZ is not part of.

In a letter issued on May 15 to Golix, the central bank ordered them to cease all their cryptocurrency trading and gave banks a maximum of 60 days to stop any relationships they may have with virtual currency exchange platforms in a circular that had been issued on May 11.

The high court ruling also gave the central bank of Zimbabwe a maximum period of 10 days, within which they can oppose the provisional order. In addition, the RBZ was also ordered to pay the cost of the suit.

Continue Reading

Bitcoin

Kidnappers in South Africa Demand Bitcoin Ransom for Teenager, Boy Found Unharmed

Published

on

Kidnappers Demand Bitcoin Ransom

In South Africa, a gang has kidnapped a 13-year old teenager and demanded a ransom to be paid in bitcoin for his release. The abductors have demanded a ransom of 15 BTC, which is an equivalent of $120,000 at today’s prices.

“This is a kidnapping! We have your child. Your child will not be harmed if the following demands are met: We demand a ransom of 15 bitcoins to be paid to the below Bitcoin wallet to secure your child’s safe release,” reads the note left by the kidnappers.

According to The South African, 13-year-old Katlego Mariate was kidnapped while playing with two of his friends at his home in Frangipani Street, Tasbetpark Extension 3, Witbank. Witnesses testified the victim was grabbed into a gold Toyota Corolla occupied by three unknown men before driving off.

The Police spokesman, Brigadier Leonard Hlathi, said the situation is being investigated:

“We are investigating a case of kidnapping that happened on Sunday in Witbank. There was a demand that was made that the parents should deposit cash in bitcoins.”

Another police officer said the parents of the victim, who are in deep shock over the incident, do not even know what bitcoin is. “They don’t even know what this bitcoin is. They’re devastated and you can see they’re worried and asking themselves: ‘Where’s our son?”

Boy Found Unharmed

According to Reuters Africa, police spokesman Hlathi informed the public that the boy was found unharmed on May 24.

This appears to be the first case in the country involving a bitcoin ransom in a kidnapping. However, it is not the first time this has happened in other parts of the world. Last year, a bitcoin analyst was kidnapped in Ukraine and, in early 2018, a lawyer was abducted with respective kidnappers demanding bitcoin as ransom in Mexico.

Continue Reading

Popular Posts