Two young brothers behind South African cryptocurrency investment firm Africrypt have disappeared with an estimated $5 billion worth of investors’ money in what could be the largest ever cryptocurrency scam.
Raees and Ameer Cajee – 21 and 18-years-old respectively – founded Africrypt in 2019 and promised customers significant returns on investment, reportedly as high as 10 per cent per day for some clients.
Hanekom Attorneys, which is representing some of Africrypt’s investors, said 54 billion South African rand – or around $5 billion – worth of cryptocurrency had been moved from Africrypt’s accounts after the hack, according to Moneyweb.
Following a supposed ‘data breach’ in April, Africrypt told investors “client account, client wallets and nodes were all compromised”.
“Unfortunately, this has forced Africrypt to halt operations. We have begun the process of attempting to retrieve stolen funds and compromised information,” it said.
“We urge all clients to please be patient as we attempt to resolve the situation at hand.
“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.”
The company soon went dark, turning its website off and stopping communication with investors.
By asking clients to keep quiet, the company’s founders appear to have bought more time to obfuscate the money’s movements, Hanekom said.
“Whilst we are still in the process of investigating the transfer of funds, with transactions on the blockchain being active up and until even date, upon an initial reconciliation, it seems that the funds were subjected to various dark web tumblers and mixers, resulting in severe fragmentation,” Hanekom said.
The law firm has been in touch with law enforcement, regulatory authorities, and other cryptocurrency exchanges and is hopeful exchanges “will be open to disclosing information relating to wallets used by Africrypt or their proxies”.
Africrypt is not the only the South African cryptocurrency company to pull the rug from under investors, after Mirror Trading International (MTI) CEO Johann Steynberg locked investors’ accounts and fled the company.
Like Africrypt, MTI promised extremely high returns on investment and had been flagged by US regulators for running an alleged fraud before the company collapsed.
Earlier this year, the founder of a Turkish cryptocurrency firm disappeared with an estimated $2.6 billion worth of investor money after the country began a crackdown on cryptocurrency.
It’s a stark warning for would-be cryptocurrency investors about the risks of storing large amounts of cryptocurrency on exchange platforms where you don’t have full control of your keys and wallets.