SA Crypto firm AfriCrypt allegedly defrauds investors of over R54bn; founders flee to UK
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A South African cryptocurrency investment company, AfriCrypt, has allegedly defrauded about $3.6 billion (about R54bn) in investor funds, after the company said its trading system was “hacked”.
A total of 69 000 bitcoins were stolen.
Investors were told to not report the hack to law enforcement, which the founders claimed would slow the recovery process.
However, AfriCrypt founders, Ameer Cajee, 17, and his brother, Raees Cajee, 20, then allegedly transferred the invested pooled funds from a South African account before fleeing to the UK.
Investors were reportedly instructed to deposit funds via EFT into AfriCrypt’s FNB banking account.
FNB risk spokesperson Nadiah Maharaj spoke to Business Report and refused to acknowledge any relationship with the fraud-accused company.
The story was broken by the investigative unit through BR on July 17.
“FNB once again confirms that it does not have a banking relationship with Africrypt. Due to client confidentiality, FNB cannot provide any information on specific bank accounts,” Maharaj said.
AfriCrypt investors lost access to the system’s back-end after the company announced the “hack”
“We regret to inform you that due to the recent breach in our system, client accounts, client wallets and nodes were all compromised,” it said.
“Unfortunately, this has forced Africrypt to halt operations… We urge all clients to please be patient as we attempt to resolve the situation. It is understandable that clients may proceed the legal route, but we ask clients to please acknowledge that this will only delay the recovery process.”
Darren Hanekom, the attorney handling the case on behalf of investors, said the funds were “subjected to various dark web tumblers and mixers, resulting in severe fragmentation.“ In other words, the funds were virtually untraceable.
Hanekom Attorneys said they have alerted various global exchanges about the alleged theft in a bid to watch out for efforts to convert the bitcoins.
The regulatory body, the Financial Sector Conduct Authority, has denied having jurisdiction. It was further stated that it was the FSCA’s view that no financial product or financial services were provided.
The Gauteng South High Court has granted a provisional liquidation order against the two brothers, in favour of about 20 investors.
The Cajee brothers have until July 19, 2021 to argue against the liquidation.
This AfriCrypt fraud has been likened to the Mirror Trading International scam.
According to a recent crypto crime report by leading blockchain analysis firm, Chainalysis, the MTI scam is classified as 2020’s biggest scam globally.