AfriCrypt, a South African investment company has reportedly defrauded 69, 000BTC (about $3.6 billion) in investor funds after claims of its trading system getting hacked.
Shortly thereafter though, AfriCrypt directors, Ameer Cajee, 17, and his brother, Raees Cajee, 20, allegedly transferred the invested pooled funds from a South African account before fleeing to the UK.
Investors were apparently required to deposit funds via EFT directly into AfriCrypt’s local FNB banking account with Ameer managing the client accounts.
FNB, the bank where investor funds were pooled, has denied its relationship with AfriCrypt saying:
“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.”
– FNB, South Africa
AfriCrypt investors lost access to the system’s back-end after the company announced ‘hack’ saying:
“We regret to inform you that due to the recent breach in our system, client accounts, client wallets and nodes were all compromised …
“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.”
According to Darren Hanekom, the attorney handling the case on behalf of investors, the fund were ‘subjected to various dark web tumblers and mixers, resulting in severe fragmentation.’
The regulatory body, FSCA, has however denied having jurisdiction. It was further stated that it was the view of the FSCA that no financial product or financial services were provided.
The Gauteng South High Court, South Africa, has granted a provisional liquidation order against the two brothers in favor of about 20 investors. The brothers have until 19 July 2021 to argue against the liquidation.
The AfriCrypt fraud is just one of the many massive crypto scams that have plagued South Africa prompting the authorities to take action with the recent release of a position paper confirming that crypto assets will be brought into the South African regulatory scope in a phased and structured manner.
Mirror Trading International (MTI), another massive scam from South Africa, is classified as the biggest scam globally of 2020 in a recent crypto crime report by Chainalysis, the world’s leading blockchain analysis firm.