Tag: Ponzi scheme

A recent Gauteng High Court judgment has brought clarity on the interaction between consolidation orders under the Companies Act and the South African Revenue Service’s (SARS) powers to raise tax assessments. In Prinsloo and Others N.O. vs CSARS and Another (020214-2023) [2025] ZAGPJHC (29 August 2025), the court quashed an attempt by liquidators to set aside SARS assessments against a Ponzi scheme.

Technology is always great when it’s used in an ethical manner. We have a better working environment currently than some of the fore-bearers of the finance ecosystem. With the introduction of artificial intelligence (AI), we have to also consider the risk of fraud.

The key to helping investors to better protect themselves from falling victim to investment fraud is to stay alert and be aware of the key characteristics and red flags associated with Ponzi and Pyramid schemes. Ponzi schemes have existed for over one hundred years and range in shape, complexity, and size. Investors are often promised extraordinarily high returns within a short period of time, with little or no risk.

Since the emergence of Bitcoin in 2009, cryptocurrency has gained significant traction in popularity over the years, with more and more people investing in the now many variations of digital currencies available such as Ethereum, Tether, Binance, and even Dogecoin.

The rising cost of living continues to tighten its grip on the economy, giving scammers, fraudsters and hustlers the green light to prey on those desperate enough (and potentially unaware of the dangers) to choose an easy way out of the financial hole they have fallen into.

Lebanon is facing a financial meltdown so severe that the World Bank has branded it as one of the worst since the mid-19th century. The country is fast spiralling into a dangerous situation of state failure, marked by violent riots, escalating blackouts and spiking fuel price increases.

There are roughly 810,000 active stokvel groups consisting of over 11 million South Africans, collecting an estimated R50 billion annually. Nearly 40% of South Africa’s adult population are members of a stokvel. Recently there has been an increase in illegal pyramid schemes or Ponzi schemes, which continue to pop up around South Africa.

History, of course, tells us that Ponzi schemes and financial scams are nothing new. However, their sophistication in the online space and in a digitally connected world are tailor-made for casting a wider, global net that lures potential investors with promises of 20% or 30% returns – or, in one recent incident, interest of 7% a week.  

The infamous case of South Africa’s Mirror Trading International (MTI) has been crowned as the world’s largest cryptocurrency Ponzi scam. A total of around $589 million was lost, affecting hundreds and thousands of investors, according Chainanalysis’ 2020 Crypto Crime Report.

It’s no secret that South Africans are under pressure financially – with a slow economy, increasing electricity and petrol prices and slow wage growth. Many may therefore search for ways to make their savings work harder for them, and in so doing fall prey to short-term investments that offer unusually high returns.