Unmasking a Bitcoin scam setting up shop in South Africa

South Africa has been flooded with get-rich-quick schemes that are using the mystique of Bitcoin to try and hide old scam techniques.

One of these new scams that has been spotted advertising on cars around the Durban area is Smart-BTC.

Navigating to the scheme’s webpage (smart-btc.co.za) revealed what appeared to be a standard high-yield investment programme (HYIP) scam.

The website lists six seemingly arbitrary packages that are categorised into “short term” and “long term”, with each category containing silver, gold, and VIP packages.

All of the packages claim to offer a return of 20% interest every week.

This is the first red flag that Smart-BTC is a scam.

The Consumer Protection Act (CPA) expressly prohibits schemes that promise a return that is more than 20% above the repo rate. It defines these as “multiplication schemes“.

South Africa’s current repo rate is 3.5% per annum, which means that any scheme that promises an interest rate of more than 23.5% per year is considered a multiplication scheme.

Smart-BTC’s annual interest rate works out to 1,040% per annum. Compounded weekly, this would generate an effective annual return of over 1,300,000%.

Digging deeper

The “About Us” page on the Smart-BTC website contains suspicious wording such as “Ranked 4th on Transparency International”.

A quick search revealed that this statement, along with all the others on the Smart-BTC about page, have been used by people who market a scheme called Elamant.

Elamant is a scam purporting to offer all kinds of benefits for paying members. It also offers a compensation scheme by allowing members to become “paid consultants”.

According to the Elamant website, these “consultants” earn income based on the number of people they have personally recruited into the scheme, and the overall size of their referral network (i.e. referrals of referrals).

The Consumer Protection Act prohibits schemes were participants receive compensation derived primarily from recruitment, rather than from the sale of any goods or services. It defines these as “pyramid schemes”.

While the Smart-BTC website contains the same wording as recruiters for Elamant, it does not appear to be directly affiliated with the scheme. Instead, it seems as though Smart-BTC simply plagiarised the text on its “About Us” page from Elamant recruiters.

Headquartered in Bangladesh, scamming all over the world

Another suspicious element on the Smart-BTC website is the scheme’s address, which is listed as: “Garden Street, Ring Road, Shyamoli, Dhaka 1207, Bangladesh”.

A search for this address returns a list of websites that all look almost exactly the same as Smart-BTC: forexopts.com, mybinaryprofit.com, forexcapitalfx.com, digitalsmartinvest.com, autocryptominers.com, platinum-assets.com.

Many of these websites contain links to a company called TheSoftKing. The previous address search also leads to TheSoftKing website.

Your own Ponzi scheme website for $69

TheSoftKing is a web development company, apparently based in Dhaka, which offers several website templates that seem to be specifically designed for scams.

Two of the products it sells are PonziPRO (priced $199) and ePonzi ($79).

It also offers several web templates under the tag “HYIP” — which is just a euphemism for Ponzi scheme.

The HYIP website template that Smart-BTC appears to be based on is called HexaTrade. TheSoftKing sells it for $69.

Screenshot of the HexaTrade web template listing on TheSoftKing
(Click to enlarge)

Do not be greedy… at first

TheSoftKing has published demos and guides to its YouTube channel showing how to use its platforms.

The person doing the demos uses the name Abir Khan throughout the videos.

In one video titled “How Admin Make Money” (embedded below), Khan gave advice to those using their system: Do not to be greedy at first.

He provided the following playbook for the scammers that use their software:

  1. Create 5–10 (fake) users and give each account a small balance, creating the appearance of activity on the site.
  2. Do not pull large amounts out of your scam at once — allow your members to also get pay-outs.
  3. When people in your scheme see that they can make successful withdrawals, they will draw other people into the scam.

“Don’t be greedy at first. Let them get paid and you can take your profit very slowly, steadily. Just remember one thing — slow and steady wins the race.”

More digging

Further searching led to the personal website of Abir Khan, who claims to work for TheSoftKing as a software engineer since December 2014.

According to Khan’s website, his responsibilities at TheSoftKing includes taking care of client websites.

His “Contact Me” page lists the phone number (+)880 1737 042794. A search of this number returns several more sites which appear to be based on TheSoftKing templates.

The number also comes up on the page for a web hosting company called HostRecline. However, when you try to register on the HostRecline website it leads you to a dead domain.

Surreal telephone conversations

MyBroadband contacted Khan, who confirmed that he works for TheSoftKing and that Smart-BTC uses one of their templates.

He also disputed that they sell web templates for the purposes of defrauding people.

“If you run an ecommerce site… you can sell good things like clothes or mobile phones. But if you sell weapons, who is responsible? The admin of the site or the developer?”

Khan also said that while the word “Ponzi” might have negative connotations in South Africa, but in the Southern parts of Asia it’s not a “bad word”.

MyBroadband explained that Ponzi schemes are named after a man, Charles Ponzi, who became infamous for scamming people through a fraudulent investment scheme.

“That could be, [but] we treat [Ponzis] as a [multilevel marketing] process,” Khan stated.

MyBroadband also called the Durban number listed on the Smart-BTC website (031-830-5047) and spoke to a man with a South African accent identifying himself only as “Mal”.

Mal said that Smart-BTC is an international company, which is why deposit and withdrawal data on the website is listed in dollars instead of rand.

Initially, Mal claimed to be the head of Smart-BTC in South Africa, but later in the phone call, he said the scheme is run by a man named Adrian Naidoo.

Mal also said that he was an “administrator” and “leader” of Smart-BTC in South Africa.

When confronted with the information that Smart-BTC is built on software from TheSoftKing, which sells templates like PonziPRO and ePonzi, Mal said he did not know anything about that.

Mal resisted attempts to escalate our conversation to someone more senior and rebuffed requests to speak to the supposed Adrian Naidoo, saying that he was a very busy man who travels a lot.

Now read: Allegations, denials, and contradictions in multi-billion MTI saga

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Unmasking a Bitcoin scam setting up shop in South Africa