Up to $3.6bn in Bitcoin has disappeared from a South African cryptocurrency investment outfit as well as the two brothers who ran it.
Africrypt, led by founder and CEO Raees Cajee and his sibling and COO Ameer, claimed two months ago it had been hacked and had to halt its operations. The biz also urged its investors – said to include celebrities, the rich, and the like – to keep quiet and not alert police as doing so would apparently derail the process of recovering any coins stolen from the biz’s digital wallets.
A group of 20 or so of those investors have since hired a law firm to investigate the fiasco, and obtained from the South African courts a provisional liquidation order against Africrypt. Raees, 21, and Ameer, 17, have until July to appeal against the order, though we note they have essentially vanished.
And that’s not the only thing that has gone missing: some 63,000 Bitcoins, valued at nearly $4bn at the time they disappeared from Africrypt’s wallets, according to South Africa’s ITWeb this month. The publication was unable to obtain any comment or explanation from the siblings. The company’s compliance officer reportedly said he didn’t know for sure what had happened nor where the brothers were.
Africrypt’s business model may not come as a surprise: it persuaded investors to hand over six or seven-figure sums, and promised them as much as ten per cent daily returns by investing the cash into crypto-coins.
In a memo to investors on April 13 before evaporating into thin air, the Cajees said “it is unknown to us the extent of personal client information breached during the attack,” and they promised to keep all informed if they was able to pull back any “stolen funds and compromised information.”
Then communications dried up, and that set alarm bells ringing. The company’s tech staff also found themselves unable to access Africrypt’s back-end systems a week before the alleged security breach, according to Bloomberg. The website of the investment startup, which was founded in 2019, has also been taken down. It’s rumored the brothers have fled to somewhere in the UK.
The lawyers hired by the investors found, through blockchain analysis, that coins from Africrypt’s wallets had been run through Bitcoin mixers and tumblers to hamper any further tracing. Cryptocurrency exchanges were said to be on the look out for any signs of anyone trading the coins.
South Africa’s financial watchdog, the Financial Sector Conduct Authority, is said to be mulling an investigation into Africrypt, with the main hurdle to launching a probe being whether or not the regulator can find any actual legal jurisdiction over the biz and its crypto-based offering. ®
PS: Those 63,000 Bitcoins are now worth $2.1bn due to a downward trend this month in cryptourrencies.