Crypto Fraud Wave Wipes Out Savings in Cape Verde

Africa · Western

A cryptocurrency fraud wave centred on a platform called WS has devastated hundreds of Cape Verdean families, exposing a dangerous regulatory vacuum in one of Africa’s best-governed small states.

How the WS scheme operated

WS was marketed across Cape Verde as a cryptocurrency investment vehicle promising to double or triple capital within weeks. Local and regional reporting describes it as “a pirâmide da ilusão”—the pyramid of illusion—because returns were paid from new deposits rather than genuine trading.

Victims were shown small initial earnings as proof the system worked. They were then encouraged to reinvest and recruit relatives and friends, a classic Ponzi dynamic that turned social trust into a mechanism of extraction.

Hundreds of citizens, including low-income workers such as taxi drivers, were drawn in by promises of rapid profits. Many families sold livestock, land, or other productive assets and even took out bank loans to invest, only to lose everything when payouts stopped.

The human cost of the cryptocurrency fraud wave

One victim identified in reporting, Carlos Correia, lost approximately €4,000 (about $4,350), a very large sum in local terms. Victims have expressed guilt and shame over having recruited family members into the scheme, deepening the social damage.

The losses cascade into the formal financial system because some participants borrowed from regulated banks to fund their WS investments. This creates non-performing loans and reduces household resilience across communities already facing limited formal employment opportunities.

Fraud specialists point to a fundamental information asymmetry. Promoters controlled the narrative and technical jargon while small investors had limited financial literacy and no easy access to neutral expertise.

Regulatory gaps and official warnings

The Banco de Cabo Verde, the central bank, has publicly warned that virtual currencies such as Bitcoin have no official registration or licence to operate in the national market. The bank emphasises that crypto assets in Cape Verde are unregulated and high-risk.

Cape Verde has no dedicated crypto-asset regulatory framework. The central bank treats cryptocurrencies as speculative virtual assets outside the formal payment and banking system, leaving it with limited direct tools to supervise or shut down non-bank digital schemes.

This regulatory vacuum is striking because Cape Verde has acted decisively on conventional banking reform. After the Luanda Leaks revelations, parliament unanimously approved a law in February 2020 to shutter offshore banks serving only non-resident clients, and today no offshore banks operate in the country.

A regional pattern of crypto-enabled fraud

The WS scandal sits within a broader West African pattern. According to the Inter-Governmental Action Group against Money Laundering in West Africa, the region recorded about $2.1 billion in suspicious cryptocurrency-related transactions in 2024.

Dr. Emomotimi Agama, Director-General of Nigeria’s Securities and Exchange Commission, highlighted this figure at the West Africa Compliance Summit held in Praia, Cape Verde. He warned that criminal actors are exploiting lax regulatory frameworks through DeFi “rug pulls”, fake crashes, and unregistered exchanges.

Comparative cases reinforce the pattern. In Nigeria, the CBEX Ponzi scheme allegedly absconded with an estimated ₦1 trillion (about $840 million) in investor funds.

In South Africa, the Africrypt case involved Bitcoin valued at $3.6 billion that reportedly dissipated from a high-yield investment platform.

Great-power dynamics and strategic exposure

Cape Verde has long balanced relations between three major partners: the European Union, the United States, and China. Each courts the archipelago for strategic reasons including maritime access, diplomatic influence, and economic ties, as explored in our pillar Africa: The New Scramble.

EU and US influence tends to push Cape Verde toward strong anti-money laundering standards and transparency, as seen in the offshore bank closures. Chinese engagement brings investment and infrastructure but also heightened Western scrutiny about financial integrity.

This balancing act means Cape Verde must maintain financial credibility to attract investment from all three partners. Yet it has limited capacity to police fast-moving digital financial innovations, making it exposed to global scam infrastructure without the regulatory horsepower of larger powers.

What the cryptocurrency fraud wave means for investors

For foreign investors and businesses operating in or through Cape Verde, the WS episode highlights the need for strong know-your-customer processes and local partner due diligence. The losses also carry macro-level risks, including potential erosion of support for formal financial institutions.

Globally, an estimated $17 billion was stolen through crypto scams and fraud in 2025, according to Chainalysis. Individual-level attacks accounted for roughly $713 million of that total, reflecting a systemic reallocation of risk from sophisticated institutional players to small retail investors in emerging markets.

Cape Verde’s experience provides evidence that crypto-related consumer protection and cross-border enforcement must be tailored to small island developing states. The country’s swift action on offshore banking after Luanda Leaks contrasts with its slower move on crypto, showing how traditional great-power pressure works more effectively on conventional banking than on decentralised digital assets.

Frequently Asked Questions

What was the WS platform in Cape Verde?

WS was a platform marketed as a cryptocurrency investment vehicle that promised to double or triple capital within weeks. Authorities and experts describe it as a classic Ponzi scheme where returns were paid from new deposits rather than genuine trading.

Hundreds of Cape Verdean families lost savings, livestock, and land after investing.

Is cryptocurrency regulated in Cape Verde?

No. Cape Verde has no dedicated crypto-asset regulatory framework. The Banco de Cabo Verde has warned that virtual currencies such as Bitcoin have no official registration or licence to operate in the national market and are treated as speculative, unregulated assets outside the formal banking system.

How big is cryptocurrency fraud in West Africa?

West Africa recorded approximately $2.1 billion in suspicious cryptocurrency-related transactions in 2024, according to GIABA. Major cases include Nigeria’s CBEX Ponzi scheme, which allegedly took about $840 million, and South Africa’s Africrypt case involving $3.6 billion in Bitcoin. Criminal actors exploit regulatory gaps across the region.

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