Money and Markets

A German watchdog has now also acted against Karatbars, the crypto company that targeted South Africans via WhatsApp

Business Insider SA
  • Germany’s federal financial supervisory authority this week issued a cease-and-desist order to cryptocurrency company Karatbars.  
  • In June the company launched its crypto-currency product in Cape Town, where it promised clients Lamborghinis and luxury watches.  
  • SA’s Financial Sector Conduct Authority says the company targeted local consumers through WhatsApp. 
  • View Business Insider's homepage for more stories.

The German Federal Financial Supervisory Authority BaFin has issued a cease and desist order to cryptocurrency company Karatbars, joining regulators in South Africa in action against the company.

Karatbars launched a crypto-currency product in Cape Town in June, promising Lamborghinis and luxury watches to the clients who showed the most commitment to the service, the Guardian reported.

The company offered online purchases of “cryptonyzed gold” tokens to consumers, who are in return offered a commission to sign up other members.

South Africa’s Financial Sector Conduct Authority (FSCA) on Monday warned consumers against using Karatbars services.

In South Africa, the FSCA said, Karatbars has been offering investments to customers through WhatsApp. 

The Bank of Namibia declared Karatbars a pyramid scheme in May.

On Tuesday, the German business newspaper Handelsblatt reported the public prosecutor in Stuttgart in Germany has opened investigations into Karatbars.

The Guardian reported that Karatbars was founded in 2011 by former vacuum cleaner salesman Harald Seiz. 

Seiz said the company owns a Madagascar mine containing €900 million (R14.7 billion) worth of gold, which guaranteed the stability of his currency – but the company later said it actually owns shares in a mine.

Seiz frequently posts on Instagram despite the media frenzy surrounding his company.

In a recent post, Seiz said he has ice in my veins. “This is an important skill for a businessman: act quickly, but carefully and thoughtfully. I am not afraid of taking risks and not afraid of mistakes,” he said.

“You have to make mistakes in order to learn from them.”

(Compiled by James de Villiers)

See also: Facebook bans scam that misuses Mark Shuttleworth - but almost immediately it pops up again

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