Africrypt informed its customers that it had been the victim of a cyberattack and announced that the platform had closed its operations. The investigation indicated that the funds disappeared from the accounts and wallets of clients based in South Africa, but they lost track of the coins.
In 2019, South African brothers Ameer and Raees Cajee, aged 18 and 20 respectively, founded the Africrypt cryptocurrency platform.
In April, a law firm filed a complaint with the police on behalf of a group of investors. Many users did not have access to their accounts, at the same time that Bitcoin was reaching its all-time high.
At the time, the pioneering cryptocurrency reached USD 63,226 per unit, the highest price in its history.
Africrypt COO Ameer Cajee informed the clients that the company had been the victim of a cyberattack. Additionally, he announced by e-mail that the platform had closed its operations because users’ accounts and wallets were at risk.
The Brothers Deny that They Committed the Theft
Cajee advised investors not to go the legal route as that would delay the recovery of the missing funds. After that e-mail, the two brothers disappeared for several days.
Attorney John Oosthuizen said Africrypt’s founders deny participating in the theft or running away with the funds. He said there is no basis for the accusation and stressed the brothers had been the victims of a cyberattack.
However, the complaint says that the legal services that the victims hired estimate that thousands of bitcoins vanished. The loss of around 69,000 BTC, equivalent to about USD 4 billion, would represent the biggest in a cryptocurrency scam.
The Lawyers Are Following the Trail of the Coins
According to the investigation that the law firm commissioned, the funds disappeared from the accounts and wallets of clients based in South Africa.
However, they say they lost track of the coins as the hackers used various dark web nodes and mixers. That situation makes tracking the money essentially impossible.
Africrypt employees reportedly lost access to customer support platforms seven days before the alleged attack.
Africrypt Behaved Like a Ponzi Scheme
The South African Financial Sector Conduct Authority (FSCA) said there is no regulation on crypto assets in the country. For that reason, that agency is not in a position to take any regulatory action.
As in many other countries, the financial authorities in South Africa have no jurisdiction over these scams. The reason for this is that they have not legally recognized them as financial products.
Africrypt was offering exceptionally high returns, like those of illegal investment schemes commonly known as Ponzi, according to the BBC.
Africrypt Has Been the Second Big Fiasco in South Africa Since 2020
Africrypt described itself as an investment firm focused on cryptocurrencies and blockchain technology. They said they went from being a small platform to being a big commerce and artificial intelligence company.
According to Bloomberg, the fiasco with Africrypt occurs after the South African Bitcoin platform Mirror Trading International collapsed in 2020. At that time, around 23,000 BTC, equivalent to about USD 1.2 billion, were at risk, according to data from Chainalysis.
When compared to that event, Africrypt investors could be facing three times greater losses.By Willmen Blanco