Anatomy of a bitcoin scam that’s hit at least four South Africans

TJ Naidoo (not her real name) works in a hospital in the Durban area and, sucked in by the buzz around bitcoin, decided she wanted to make some extra money to supplement her income.

She logged on to Facebook and started searching. Before long, she came across this guy:

Source: Facebook

Chris, it turns out, is a trader with a company called GooTrader.

GooTrader’s website assured TJ that it was “a legally operating company” but with nothing to verify this other than a bald statement.

Chris, when not making fortunes from cryptos, spends his time doing this:

Source: Facebook

TJ connected with Mason on Facebook. He offered her an opportunity to make some quick profits with bitcoin: invest R3 000 in bitcoin, said Chris, ship it to an address where he would put it to work in bitcoin “mining”, and she would get R11 000 in a matter of weeks.

In November last year, TJ purchased R3 000 worth of bitcoin through the Luno crypto exchange and sent it off to the address supplied by Chris.

Sure enough, a few weeks later she had R11 000 deposited into her Luno account.

She had made an astonishing 266% on her R3 000 investment.

Satisfied that her first investment worked out so well, she was game for another round.

Time to think bigger

But this time Chris said she should invest a bit more, and get a few friends to come on board as well, making it a party of four. TJ did R8 000 for herself and R3 000 for her mother. The two friends who came on board invested R3 000 and R5 000, making a total of R19 000 between the four.

All of this was used to buy bitcoin, again through Luno, with an instruction to send it off to a “GooTrader” bitcoin wallet, or what Chris called a “trade link” account.

This time, TJ and her friends stood to make an unbelievable R800 000 from their investment, also within a matter of weeks.

If that sounds too good to be true, it was.

When the “investment” fell due in early March this year, TJ and her fellow investors could hardly wait to get their hands on the promised R800 000.

Problems start cropping up

But there was a problem: Chris said she had to pay “tax” of R120 000 to get the money released.

TJ went out and took a personal loan and paid the R120 000 “tax” – also in bitcoin, to Chris’s wallet.

Still there was a problem. Because TJ had taken so long to pay the “tax”, Chris now informed TJ that she needed a withdrawal PIN to get the money released.

And, bad news for Chris, his bosses were so upset with him about the delay in receiving the tax that TJ’s account had been handed over to “Anderson”.

Funnily enough, Anderson’s English reads very much like Chris’s. TJ communicated with Chris/Anderson via WhatsApp and Facebook.

Here’s how it went on WhatsApp:

Chris: Once you have deposited the money to your Luno, let me know okay so I’ll guide you okay

TJ: Ok, I have to send it (the bitcoin) to the trade link?

Chris: Yeah, but not that link okay, it has to be the direct link for the pin. Let me send it to you.

Chris then sent a bitcoin wallet address, and TJ duly shipped the bitcoin to Chris’s bitcoin “wallet”. At that point her bitcoin was gone.

I decided to hop onto GooTrader to see if I could make any sense of what happened. I opened up a chat box and in no time “Bruce” was on the other end.

Me: Is this for real? Can I speak to Marco Verratti (one of the directors listed on the website)? You say there is 100% chance of NOT losing money. How so?

Bruce: Sir, you can get directive from any of our officers okay. There is not (sic) way you are going to lose your money because you alone will have access to your trade account….You have to trust the platform okay, so a start (sic) I’ll advise you to start with the minimum amount so you’ll be able to see how it all works okay.

Bruce: Ma’am it all depends okay… Only when you exceeded paying COT (sic), it will not have to pass through SARS verification if found hugh (sic) honestly you’ll be asked to pay Tax.

Me: What is COT?

Bruce: COT means cost of transfer!!!

Me: How much is the cost of transfer?

Bruce: Sir, COT is not determined by anyone okay, it’s determined by the market signal on your trade.

Me: Must I send bitcoin and to which address?

Bruce: Sir, you’ll create a trade account on the platform, after which you’ll now send the Bitcoin to the account you’ll create okay, once you create the account you’ll have a Bitcoin wallet on the account you’ll create.

At this point I had had enough of Bruce, or Chris, or Anderson, or whatever his name is. His use of “okay” in virtually every sentence is a dead giveaway that this is the same person.

An image search of Marco Veratti, a supposed director at GooTrader, shows the same photo popping up in dozens of other lookalike schemes.

Source: Google

There is a sad ending to this story in that TJ is now considering going under debt review to claw her way out of the hole she dug for herself.

Signs of a scam

There were red flags all along the way that TJ missed.

  • No company registration number or certificate that could be verified.
  • No licence issued by a financial regulator anywhere in the world (crypto companies are generally unregulated, but they will still have company registrations, offices, phone numbers and credible directors with a track record of business success; you can, and should, investigate these).
  • ‘Directors’ who look like pictures of models grabbed off the internet, and when you Google search that image the person shows up as a ‘director’ of other dodgy investment schemes.
  • Bad English on the website.
  • Testimonials from ‘satisfied’ customers.
  • Claims of guaranteed returns.
  • Claims that you cannot lose your money.
  • Approaching clients on Facebook or WhatsApp.
  • Insistence that you invest in bitcoin and send that bitcoin to an address given to you by the scamster (once your bitcoin is sent to that address, it is gone and there is no one who can help you recover it).
  • Adding weird costs like “cost of transfer” (when you ship bitcoin or any crypto from a legitimate company like Luno, the costs of transfer are already paid by you, and they are generally quite small. You do not have to pay two sets of transfer costs).
  • Ponzi scheme set-up, as in TJ’s case: start small and then see a successful payout. Comforted by this success, you are encouraged to go bigger the next time. That’s when it unravels. You’ve been had.
  • Delays in receiving withdrawals: claims of procedural errors in requesting withdrawals, demanding more money (like cost of transfer), and then claiming you took too long, made some administrative error – anything to delay the process. In TJ’s case, she was blocked on Facebook by Chris.
  • Claims your investment will go into bitcoin “mining”: there are reputable “miners” (who use heavy-duty computers to solve complex problems and get rewarded with bitcoin) but these companies don’t need your money, and most of them are doing fabulously well, as we previously covered in Moneyweb. Some of them are listed on stock exchanges and offer an indirect way to gain exposure to bitcoin.

A pyramid scheme by any other shape
How to identify a Ponzi scheme
How to spot an investment scam

In TJ’s case, Chris demanded she pay over another $3 000 to get her R800 000 “profit” released. That’s another roughly R45 000 she would have to pay, on top of the R120 000 “tax” and the R19 000 original “investment”.

The Financial Sector Conduct Authority (FSCA) has been alerted to GooTrader and says it will be issuing a public warning. It seems “Chris” or “Bruce” or whatever his name is operates out of Florida in the US.

Legitimate channels

There are many legitimate crypto operators in SA, and we have covered them extensively in Moneyweb. Luno is a legitimate crypto exchange, and one of the largest in the country.

Ironically, had TJ bought and continued to hold her bitcoin at Luno, her investment would now have made her more than 100% gains since December 2020.

A look at Chris Mason’s Facebook page (which we will not supply) suggests numerous South Africans are about to take the same tragic steps as TJ.

“I would laugh if it was not so tragic,” she says.

According to Brandon Topham, head of enforcement at the FSCA, which issued a health warning on cryptos two weeks ago: “… it seems these people are foreign and even if local, the chances of you receiving anything back ever is less than 0.000000000000001% unfortunately.

“The banks won’t be able to do anything to help either unfortunately.”


Anatomy of a bitcoin scam that’s hit at least four South Africans
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