The community leader said: "They believed that they were going to be rich because the company promised 100% returns in just two weeks after investing. They wanted easy cash and then reality came crashing down on them," he said.
Investors "smelled a rat" almost a week ago when Bitcoin Wallet's office closed down. Mbatha reportedly said it was on the instruction of the local municipality.
However, the Alfred Duma local municipality subsequently issued a statement denying Mbatha's claim.
Mbatha is alleged to have then told investors that the company had gone online and that they needed to upload their details to be paid out.
On Tuesday, he told Ladysmith's community radio station, Nqubeko FM, that hackers had "infiltrated" the website and "stolen" investors' monies.
Investors have not been able to reach him.
"There are claims he has fled from Ladysmith, but no one can really confirm. At this stage, the whole town is talking about Bitcoin Wallet. It's a sad state of affairs because the poor may have been taken for a ride," the community leader said.