Bitcoin sellers on Facebook: Can they be trusted?

2016-09-19 12:14 - Kyle Venktess, Fin24
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Durban - A local trader who is selling bitcoin through Facebook says he is doing so legitimately, but experts have warned of the dangers around purchasing the cryptocurrency in this way.

On a Facebook page belonging to the controversial MMM group, members openly advertise their trade of bitcoin.

Adverts are abound about traders selling portions of the cryptocurrency for as little as R130.

The MMM platform, though, has been shunned as a ponzi scheme by financial experts and organisations.

The platform encourages members to donate money to other members with the bitcoin-linked virtual currency, 'mavros'.

In return, they can withdraw in rands, and MMM promises that members can get 30% return on their rand investment.

Despite facing scrutiny, the MMM Facebook presence remains active and a number of members are also selling bitcoin via the page.

The traders promise to send buyers of bitcoin a cryptographic key in return for the likes of an electronic funds transfer.

An example of an advert on Facebook

Bongani Mbushu, a bitcoin trader advertising on the MMM Global SA Facebook group, told Fin24 that he himself did not recommend that people buy the cryptocurrency from just anyone on the internet.

“I am [an] honest and loyal guy, I am not trying to scam people but there are people on the internet who are trying to scam people. There is a risk that a person could deposit money into someone else’s account and not fulfill the promise,” he said.

Mbushu said that he bought and sold bitcoin through a trading platform, and that after calculating transactions fees, including fees of his own, he was able to give a price to people wanting to purchase the currency.

“Basically there are a lot of people who don’t understand how to buy bitcoin because it is a very complex process. What I do is make the process easier for people,” Mbushu said.

Mbushu, who also uses the MMM platform himself said that he had yet to see issues while using the service.

“I’ve tried using it and it clearly states that you are making a donation when you are using the service. People are using the bitcoin to use the MMM platform and so far I haven’t heard of any complaints,” he said.

Warning over Facebook sellers

Experts, though, have warned users of the risks of buying bitcoin via social media.

Werner van Rooyen, of South African linked digital wallet service BitX, said that there are dangers around buying bitcoin online from a stranger.

“If you bought bitcoin from a stranger online, you risk sending them your rand (via bank or other money transfer) and never receiving the agreed-upon bitcoin back in exchange,” van Rooyen told Fin24.

“The other risk is that you may inadvertently be facilitating the laundering of ill-gotten money, when you're selling your bitcoin to strangers,” he said.

But buying it in person also carried a safety risk in the same way that there would be the risk of fraud or theft when exchanging dollars for rands on the street, said van Rooyen.

READ: What SA's top 5 banks say about MMM

“Another risk may be that you are given a bad rate of exchange, compared to online exchanges,” he said.

Have you bought bitcoin from Facebook ads? Tell us about your experience by clicking here.

@KyleVenktess on Twitter.

Read more about: bitcoin  |  mmm