Cryptocurrency: Brothers disappear with $3.6bn Bitcoin investors’ funds

*Lawyers hired by investors to probe Africrypt, in South Africa, concluded funds had vanished into thin air, and the crypto company’s employees equally lost access to the back-end platforms seven days before the alleged hack

Isola Moses | ConsumerConnect

In what observers have described as one of the highest ranking-ever crypto heists in the world, a pair of South African brothers have vanished, along with Bitcoin worth 51bllion Rand ($3.6 billion) from their cryptocurrency investment platform.

To compound the crypto investors’ woe, it was gathered that a law firm based in Cape Town, South Africa, hired by the shareholders, said they could not locate the brothers.

The legal firm stated it had reported the matter to the Hawks, an elite unit of the national police force in the Southern African country, Bloomberg report said.

It’s also told crypto exchanges across the globe should any attempt be made to convert the digital coins.

Following a surge in Bitcoin’s value in the past year, report indicated that the disappearance of about 69,000 coins, worth over $4 billion at their peak April this year,- would represent the biggest-ever Dollar loss in a cryptocurrency scam.

The incident could spur regulators’ efforts at imposing order on the market amid rising cases of fraud in recent times.

The first signs of trouble was said to have come April, as Bitcoin was rocketing to a record.

Ameer Cajee, Chief Operating Officer (COO) of Africrypt, the elder brother, informed clients that the company was the victim of a hack.

Cajee reportedly asked them to not report the incident to lawyers and regulatory authorities, as it would slow down the recovery process of the missing funds at the time.

Investors involve a legal firm

However, in spite of the COO’s assurance of funds recovery, some skeptical investors roped in the law firm, Hanekom Attorneys, and a separate group started liquidation proceedings against Africrypt.

Hanekom Attorneys in response to e-mailed questions was quoted to have said: “We were immediately suspicious as the announcement implored investors not to take legal action.

“Africrypt employees lost access to the back-end platforms seven days before the alleged hack.”

The firm’s investigation established that Africrypt’s pooled funds were transferred from its South African accounts and client wallets, and the coins went through tumblers and mixers, or to other large pools of Bitcoin in order to make them essentially untraceable.

Meanwhile, calls to a mobile number for Cajee were immediately directed to a voicemail service.

The company’s COO and his brother, Raees, 20, set up Africrypt in 2019, and it provided bumper returns for investors over time, report noted.

Calls to Raees also went straight to voicemail. The company Web site is down.

The current saga is unfolding after the collapse of another South African Bitcoin trader, Mirror Trading International in 2020.

The losses there, involving about 23,000 digital coins, totalled about $1.2 billion in what was called the biggest crypto scam of 2020, according to a report by Chainalysis. Africrypt investors stand to lose three times as much, report added.

South Africa regulators ‘look into’ crypto investment scam

As South Africa’s Finance Sector Conduct Authority is also looking into Africrypt, it is currently prohibited from launching a formal investigation because crypto assets are not legally considered financial products, according to the regulator’s Head of Enforcement, Brandon Topham.

China recently, also escalated its crackdown on cryptocurrency trading after a frenzied surge in Bitcoin and other tokens over the past six months heightened longstanding Communist Party concerns about the potential for fraud, money laundering and trading losses by individual investors.

In January, the daily value of crypto-asset trading exceeded 2 billion rand ($141 million) for the first time in South Africa, suggesting significant appetite in a market that was largely going unchecked by regulatory powers, said the report.