By Vernon Wessels
A monumental R216m fine and the subsequent arrest of an individual peddling crypto-investment opportunities in South Africa and Namibia with annual returns of up to 669% underlines a simple warning: if an opportunity seems too good to be true, it probably is.
Coenraad “Coenie” Botha and his 32-year-old Zimbabwean wife were arrested by Namibian authorities last month and appeared in a Windhoek court on suspicion of fraud, taking deposits without a banking licence and money laundering.
They were also accused of running a Ponzi scheme from 2018 to 2022 in which new funds are used to pay earlier investors. In all, N$163m was taken from investors, according to a report in The Namibian.
The 69-year-old promised returns of 1%-4% per week and operated through a network of companies in South Africa and Namibia; CBI X, CBI Association, Uhuru Tribe, Uhuru-X and Uhuru Cash. The Bank of Namibia and CBI Exchange Namibia have been embroiled in legal wrangles since the central bank froze CBI Exchange Namibia’s account in March 2022.
In South Africa, the Financial Sector Conduct Authority (FSCA) had been warning about Botha and his companies since April 2022. Announcing the administrative penalty at the end of March, the FSCA also said Botha would be prohibited from providing financial services or working for any financial institution in South Africa for 10 years.
Despite offering these immense returns, the regulator said an investigation had found that there was “no legitimate financial product or investment activity that generated the purported returns” offered by those funds.
“High on the list of red flags for potential investment scams is unrealistic returns,” Gerhard van Deventer, the FSCA’s head of enforcement, told Today’s Trustee. “They also claim they don’t need an FSCA licence to operate, offer vague information about their product or company, and often claim that investors need to act urgently.”
The size of the penalty imposed by the FSCA, he said, is usually determined by looking at aggravating circumstances, such as the cooperation of the individuals involved and the
potential harm caused to the public.
The FSCA investigation disclosed that there was no legitimate financial product or investment activity that generated the purported returns paid to the investors by Botha and CBI entities.
The group of companies linked to Botha used several of the tricks typically associated with scams.
One of its video presentations, still accessible on YouTube, begins with a picture of Microsoft founder Bill Gates and a quote, before the narrator explains how Botha had set up Uhuru Tribe to make it easier to trade cryptocurrencies.
As the video explains, Uhuru means “freedom to do with your money what you want, where you want, when you want.”
The narrator then talks about “levelling up”, earning extra stars, founder bonuses and the need to recruit “wealth creators below you.” It then cuts to an image of Sir Richard Branson gazing thoughtfully into the distance, with another inspirational quote.
A message sent after hours by Today’s Trustee to the office of Botha’s Namibian lawyer wasn’t immediately returned.
But in its promotional videos, CBI denied it had done anything wrong. In particular, it claimed, it didn’t make promises or encourage false expectations of income generation, and it doesn’t pay out investments with new investors’ money. Nor, it claimed, did it promise quick riches.
During one of its celebratory events, Botha said that he and his wife, Charlotte Murove, valued their privacy and that of their son, who was 15 months old at the time.
At CBI’s fourth birthday party in Namibia in November 2021, Botha told the audience that he was called “daddy” by people from the company. But at the same time, he announced that CBI was culling some of its 25,000 customers, of which 8,000 are dormant or dead.
“We want to get rid of the deadwood,” Botha said. “When I say deadwood. It’s people who stay on to spy on us all the time. They just make up a lot of nonsense about us. We want to get rid of that and move on with a clean slate. We will do it with the utmost integrity.”
At the time, he said CBI planned to expand its product range. This would include allowing members to borrow up to 60% of their investments at an interest rate linked to typical bank rates, which could be used to invest in more cryptocurrencies.
CBI also said it wanted to allow clients to fund the purchase of homes for their workers by investing a “deposit” in cryptocurrencies, the proceeds of which would be used to build a
small house of R150,000. Botha said that CBI also plans to offer tax, trust and wills services — though he claimed this wouldn’t require a financial licence as this will be done by lawyers.
For the FSCA’s van Deventer, the scams get more intricate and schemers find new ways of duping investors out of their money. Some even use the regulator’s logo.
“There are so many scams, and the number is increasing every day,” said van Deventer. “Besides, if there was some kind of magic wand that could produce these massive returns,
the last thing they’d want to do is share it with everyone.”
