South African brothers disappear with $3.6B in bitcoin in alleged heist

Business

New York Post 24 June, 2021 - 08:16am 65 views

By Will Feuer

June 24, 2021 | 9:16am | Updated June 24, 2021 | 9:28am

Two brothers in South Africa have disappeared along with $3.6 billion worth of bitcoin that was housed on their cryptocurrency investment platform, according to a Cape Town law firm hired by investors to investigate the alleged heist.

The law firm, Hanekom Attorneys, said it has reported the incident to the Hawks, an elite unit of South Africa’s national police force. Hanekom has also reported the matter to South African financial regulators and crypto exchanges around the world.

The brothers, Ameer and Raees Cajee, set up their crypto investment service, Africrypt, in 2019.

But in April, as the price of bitcoin surged to an all-time high, Ameer, who serves as chief operating officer of Africrypt, sent an email to investors telling them that the company had been hacked.

Ameer made an unusual request, asking clients not to report the incident to authorities or lawyers, saying that it would slow down their efforts to recover from the hacking.

But a group of skeptical investors contacted Hanekom Attorneys, “which focuses on all aspects of the cryptocurrency industry” and advises “large volume traders, exchanges and arbitrage companies.”

“We were immediately suspicious as the announcement implored investors not to take legal action,” the law firm said in a statement. “Africrypt employees lost access to the back-end platforms seven days before the alleged hack.”

The firm said that its investigation found Africrypt’s pooled funds were transferred from its South African accounts and client wallets, and pooled with other bitcoin transactions in order to make them untraceable.

South Africa’s Finance Sector Conduct Authority is also looking into the company, Hanekom Attorneys said, but the agency has said it can’t launch a formal investigation because bitcoin and other cryptos are not legally considered financial products.

When reached for comment, Ameer Cajee responded Thursday by email, directing The Post to his attorney for comment, but did not identify his attorney or provide contact information.

ITWeb reported that a South African judge ruled in favor of a group of about 20 investors, granting a provisional liquidation order against the brothers in April. They have until July 19 to argue against the liquidation, the outlet reported.

The two Cajee brothers were profiled in a December cover story by local outlet The Umhlanga Magazine. The story, which outlined the Cajees’ success in launching their own business, appears to have since been taken offline.

“The vision for Africrypt has always been to develop the first African cryptocurrency-focused bank, providing decentralised finance to the people who need it most, giving easy access to capital for young entrepreneurs, and stimulating growth and prosperity,” the brothers were quoted saying in a joint interview.

“Our goal is to bridge the gap between cryptocurrency and fiat currency, making it a seamless transition between the two.

Read full article at New York Post

Durban brothers vanish amid R51bn cryptocurrency scam

TimesLIVE 24 June, 2021 - 07:38am

The thing is, the cryptocurrency platform seems to have scarpered with as much as $3.6bn worth of digital coins in its coffers, according to Bloomberg. At yesterday’s exchange rate, that’s an incredible R51.27bn.

That number, to put it mildly, seems almost fantastical — it amounts to just R5bn less than the entire market value of the Woolworths group, for example.

Almost immediately the doubters congregated on social media. For one thing, Africrypt is anything but a household name, nor does it have what you’d describe as a “presence” on the local crypto-scene.

According to one market source, “there’s general consensus that the number is not just inflated, more like massively over-reported”.

Large, well-known crypto projects, the source told the Financial Mail, are generally valued at more than $1bn (R14.24bn) — but the participants in the industry know who the players are in these projects.

Koshiek Karan, founder of Banker X, spoke bluntly about this on Twitter. “Africrypt claimed to have grown from a one-man operation to ‘one of Africa’s largest and most successful AI trading companies’. Ever heard of them? Nobody has. That’s the start of any great scam.”

His thread on the story is entertaining, but it contains one great lesson: “Whether it’s forex, crypto, stocks, commodities ... if anyone ever tells you they [have] figured out a magic pattern to consistently beat the market based on secret technology ... Just remember — they’re making money from you, and not for you.”

In other words, if there is no product, then you are the product.

Given the frequency of these kinds of crypto-disasters, you can sort of understand the antipathy that central banks and other authorities have for cryptocurrencies — not least because they represent everything that isn’t under central monetary control. And, when the scammers get going, the numbers can be vast and the recourse nonexistent.

They argue that “digital tokens such as bitcoin have few redeeming features and work against the public good”.

The FT says: “The Bank for International Settlements (BIS), the global body for central banks, also dismissed stablecoins — a link between crypto and conventional assets — as an ‘appendage’ to traditional money. The strongly worded report was the clearest signal yet from central banks that they are ready to fight any effort to undermine their key role in the global financial system.”

The BIS says that “central banks stand at the centre of a rapid transformation of the financial sector and the payment system. Innovations such as cryptocurrencies, stablecoins and the walled garden ecosystems of big techs all tend to work against the public good element that underpins the payment system.”

However, as the FT points out, the BIS does endorse the development of cryptocurrencies backed by central banks themselves.

You can just imagine how this is going down with the crypto-crowd. Certainly, when it comes to Africrypt’s customers, they’d be sleeping a lot easier right now if the Reserve Bank had been there to stand behind them.

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$3.6 Billion in Bitcoin Disappears with Africrypt Founders

Yahoo Finance 24 June, 2021 - 01:05am

Two South African brothers, Ameer and Raees Cajee, have reportedly disappeared, taking $3.6 billion worth of bitcoin with them. The incident would make it one of South Africa’s biggest ever incidents related to crypto. The total amount that’s been recorded as stolen is 69,000 BTC.

The two brothers were the creators of a platform called Africrypt, which first showed signs of trouble earlier in the year. Investors hired a law firm to look into the case after Ameer Cajee said that the company was a victim of a hack in April. At the time, the company held over $4 billion worth of bitcoin.

He also asked investors not to report the incident to authorities, which further raised signs of trouble. His purported explanation was that it would slow down the process of recovering the funds. However, soon after, investors hired the Hanekom Attorneys law firm to investigate the incident.

Employees at the firm lost access to back-end platforms seven days before the founder revealed the alleged hack, according to the report. The country’s national police force has been assigned to the case, which has contacted crypto exchanges to ensure that the funds aren’t liquidated.

However, the bitcoin has been sent through mechanisms that prevent tracing — tumblers and mixers and large pools of bitcoin, which is making it hard to track the funds. The company website has also been shut down.

The Cajee brothers launched Africrypt in 2019, promising investors good returns for their money. This is not the first such incident to take place in South Africa, with another company involved in a $1.2 billion scam in 2020. One governmental group in South Africa has called for regulation of exchanges.

The cryptocurrency market, while it has done much to curb scams, is still subject to some nefarious incidents. Exchanges are working together to ensure that hackers and fraudsters cannot liquidate their funds, but it does not form airtight security.

Chainalysis, in its 2021 Crypto Crime Report, noted that illicit activity as measured by the amount of funds involved had reduced significantly since 2019, but remained an issue. It totaled over $10 billion in transaction volume.

These numbers are what is spurring governments to put regulation in place and place better oversight measures on the market. But being such a nascent asset class, it is difficult for them to come up with a one-size-fits-all solution. Furthermore, the decentralized nature of the market proves to be a tough nut to crack.

Still, governments are putting in resources to form an effective framework. Global bodies like the Financial Action Task Force (FATF) and the Bank for International Settlements (BIS) have offered their thoughts on the matter as well.

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AfriCrypt investors were told not to inform police of the purported hack because it could slow the recovery of their funds.

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GIULIETTA TALEVI: Did you say a R51bn scam?

Financial Mail 24 June, 2021 - 01:00am

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The thing is, the cryptocurrency platform seems to have scarpered with as much as $3.6bn worth of digital coins in its coffers, according to Bloomberg. At yesterday’s exchange rate, that’s an incredible R51.2bn.

That number, to put it mildly, seems almost fantastical — it amounts to just R5bn less than the entire market value of the Woolworths group, for example.

Almost immediately the doubters congregated on social media. For one thing, Africrypt is anything but a household name, nor does it have what you’d describe as a “presence” on the local crypto-scene.

According to one market source, “there’s general consensus that the number is not just inflated, more like massively over-reported.”

Large, well-known crypto projects, the source told the FM, are generally valued at over $1bn — but the participants in the industry know who the players are in these projects.

Koshiek Karan, founder of Banker X, spoke bluntly about this on Twitter. “Africrypt claimed to have grown from a one-man operation to ‘one of Africa’s largest & most successful AI trading companies’. Ever heard of them? Nobody has. That’s the start of any great scam.”

His thread on the story is entertaining, but it contains one great lesson: “Whether it’s forex, crypto, stocks, commodities ... if anyone ever tells you they [have] figured out a magic pattern to consistently beat the market based on secret technology... Just remember — they’re making money from you, and not for you.”

In other words, if there is no product, youre the product.

Given the frequency of these kinds of crypto-disasters, you can sort of understand the antipathy that central banks and other authorities have for cryptocurrencies — not least because they represent everything that isn’t under central monetary control. And, when the scammers get going, the numbers can be vast and the recourse nonexistent.

They argue that “digital tokens such as bitcoin have few redeeming features and work against the public good”.

The FT says: “the Bank for International Settlements (BIS), the global body for central banks, also dismissed stablecoins — a link between crypto and conventional assets — as an ‘appendage’ to traditional money. The strongly worded report was the clearest signal yet from central banks that they are ready to fight any effort to undermine their key role in the global financial system.”

The BIS says that “central banks stand at the centre of a rapid transformation of the financial sector and the payment system. Innovations such as cryptocurrencies, stablecoins and the walled garden ecosystems of big techs all tend to work against the public good element that underpins the payment system”.

However, as the FT points out, the BIS does endorse the development of cryptocurrencies backed by central banks themselves.

You can just imagine how this is going down with the crypto-crowd. Certainly, when it comes to Africrypt’s customers, they’d be sleeping a lot easier right now if the Reserve Bank had been there to stand behind them.

Please read our Comment Policy before commenting.

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Founders of South African Bitcoin Exchange Vanish Following Alleged $3.6 Billion USD Hack

HYPEBEAST 23 June, 2021 - 04:12pm

The outlet reported that Hanekom Attorneys, a law firm in Cape Town, said they cannot locate Ameer and Raees Cajee, the founders of Africrypt, and have filed missing person reports to the Hawks, the country’s national police force. The firm also informed crypto exchanges across the world in case there is any attempt to convert the blockchain-backed coins.

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Sibling Investment Firm Founders Vanish With Record $3.6 Billion in Bitcoin

Tom's Hardware 23 June, 2021 - 01:40pm

Gone with the wind. Once again.

Back in April when Bitcoin was skyrocketing, Ameer, the cryptocurrency investment company's CEO, informed Africrypt's investors that the company was reportedly hacked. He told them not to report the occurrence to the authorities or their lawyers, since it would only hamper the recovery process.

There is every indication that it was an inside job. Africrypt employees had lost access to the trading platform a week prior to the so-called hack. The siblings reportedly fled the country a few days before the hack as well. Africrypt's website went offline afterward, and the Cajee brothers were unreachable via their mobile numbers.

A group of worried investors have hired Hanekom Attorneys to look into the matter. According to the law firm's investigation, the scammers moved the pooled funds from Africrypt's South African accounts and clients' wallets to bitcoin tumblers and mixers. Therefore, the funds are almost impossible to trace.

South Africa’s Finance Sector Conduct Authority (FSCA) is examining the Africrypt situation, but it didn't exactly launch a formal investigation. Unfortunately, cryptocurrency assets don't fall into the category of financial products in South Africa. Therefore, the FSCA doesn't have jurisdiction on the matter. However, the report has been handed over to The Hawks, a specialized police unit that combats organized crime.

This isn't the first time a South African Bitcoin trader has made the headlines. Just last year, the now-defunct Mirror Trading International (MTI) scammed investors out of 23,000 bitcoins, the equivalent to $1.2 billion. The only upside of all this that we can think of: No one needs to resort to guns or violence for this kind of heist. A few clicks here and there and you're broke and someone else is a multi-billionaire.

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Founders of South African Bitcoin exchange disappear after $3.6 billion 'hack'

Yahoo Finance 23 June, 2021 - 12:46pm

Some of those involved in the exchange hired Hanekom Attorneys, the law firm that said it couldn’t find the two brothers, to investigate the incident. It found that someone had withdrawn Africrypt’s pooled funds from the local accounts and client wallets where the coins were stored originally and put them through tumblers and mixers, making it difficult (though not impossible) to trace the money. “Africrypt employees lost access to the back-end platforms seven days before the alleged hack,” the law firm told Bloomberg. The outlet attempted to call both Cajee brothers multiple times only to get their voicemail each time. 

Complicating any recovery attempt is that South Africa’s Finance Sector Conduct Authority can’t launch a formal investigation into the incident because cryptocurrency isn’t legally considered a financial product in the country. If no one can recover the money, it will go down as the largest cryptocurrency loss in history, easily overshadowing the approximately $200 million CAD that disappeared when the founder of Canada’s QuadrigaCX exchange died while travelling in India.

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Ameer and Raees Cajee, two brothers behind the Africrypt platform, have disappeared along with $3.6 billion in BTC bought with investors’ funds.

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South Africa BTC scam Africrypt makes off with $3.8B, asks victims not to report - CoinGeek

CoinGeek 23 June, 2021 - 12:00pm

South African investors are still in shock after a digital currency scam reportedly made off with R54 billion ($3.8 billion) and blamed it on a hack. Africrypt was around for two years, but in that time it had allegedly lured investment from high-net worth individuals and celebrities. Once it claimed it had been hacked, the company allegedly urged its investors not to report as authorities would frustrate recovery efforts.

The South African digital currency industry has barely recovered from the damage that Mirror Trading International inflicted on investors. MTI was a multi-level marketing scam that made off with close to a billion dollars from over 260,000 investors. It had grown beyond South Africa, with Texas and Canadian regulators declaring it illegal in their jurisdictions.

Africrypt is even bigger and more daring, according to a report by local outlet Moneyweb. The company was set up in 2019 by Raees and Ameer Cajee, the former being the CEO. Raees, 21, described himself as somewhat of a digital currency guru. In one of the pitches to investors, he claimed to have first heard about BTC back in 2009—when he was only 8 years old—while watching the news with his father and being hooked since.

Raees also claimed to have started mining ETH while still in school and developing his own AI-powered trading algorithm. “It was this dynamic and innovative trading system that has fuelled Africrypt’s astronomical growth from a one-man operation running out of a bedroom to one of Africa’s largest and most successful AI trading companies in only a few years,” he reportedly told investors.

Africrypt targeted high-net worth individuals and celebrities, according to reports. As with any other scam, it promised ludicrous returns, at times claiming it could offer 10% daily returns. The company was so adept at targeting its victims that most of its investors treated it like their own secret path to a world of unlimited wealth. It was this target market that Africrypt used to reach out to other wealthy investors in their inner circles. Many clients invested upwards of R1.5 million ($105,000), with some going as high as R20 million ($1.4 million).

In April 2021, the executives issued a statement via email to the clients, informing them that Africrypt had been hacked. The breach had affected client accounts, they said, and they were trying to retrieve the stolen funds. “Our number one priority is retrieving the funds as speedily as possible, however, this process is very wary and will take a substantial amount of time to complete, if successful,” they said.

However, the most curious part of the email was when they asked the clients not to report the matter to authorities.

“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.”

According to Hanekom Attorneys, the firm representing the victims, the two founders took off into the U.K. within days of the supposed hack. They have also allegedly taken down the website and disconnected all contact, including their phone numbers.

Hanekom said that most of the BTC was transferred to BTC tumblers and mixers, making it almost impossible to trace. The law firm also revealed that the scammers were reckless enough to drain the investors’ funds into some of the wallets which they had been using while operating the scam, and yet claim to be hacked.

The Cape Town-based firm remarked, “Our further analysis of the blockchain links the flow of cryptocurrency transactions to certain large local exchanges. We trust that these exchanges will be open to disclosing information relating to wallets used by Africrypt or their proxies.”

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Several High Profile Figures, Celebrities Were Among AfriCrypt Scam Investors, One of the Biggest Financial Scandals in South Africa - Bitcoin KE

bitcoinke.io 23 June, 2021 - 10:03am

New information has emerged on the mega South African AfriCrypt scam which indicates high profile South Africans and celebrities were among the investors that got scammed.

The crypto scam, which reportedly defrauded over $3.6 billion from South African investors is also being touted as one of the largest financial scandals in South Africa and the largest crypto scam so far dwarfing the MTI scandal, also from South Africa.

SEE ALSOSouth African Crypto Investment Firm, AfriCrypt, Reportedly Defrauds Over $3.6 Billion from Investors

A few large local crypto exchanges have also been implicated as having facilitated transactions with AfriCrypt.

According to an analysis by Hanekom Attorneys, the ongoing investigations have revealed how AfriCrypt was able to attract such massive investments and how the supposed ‘hack’ stayed away from the public eye for months before it leaked out.

The reason for little public attention is said that clients were asked not to alert authorities as this would frustrate the recovery of assets from the so-called ‘hackers’ giving the perpetrators time to make good their escape with the crypto holdings.

Apparently, some clients had invested as much as $100, 000 with a few as much as $1.5 million.

It looks like the real success of AfriCrypt was being able to scout for clients from a relatively limited pool of high net-worth investors and convince them to refer new clients.

While MTI scam offered outrageous returns of up to 10% a month, AfriCrypt’s even more outrageous offerings were reportedly as high as 10% a day. Clients were apparently invited to choose between 3 investment approaches:

Hanekom highlights a difference between MTI and AfriCrypt that contributed to this huge investor pool:

BitKE reached to Marius Reitz, General Manager, Luno, Africa, to get his comments on this.

MTI, on the other hand, required clients to purchase bitcoin and send it to an MTI bitcoin wallet.

AfriCrypt bore all the hallmarks of a scam. The Cajees, the company directors, were known to post pictures of their luxury cars and boasting on social media about their extensive experience in cryptos. In some of their presentations, they would claim to have mined over 100, 000 Ethereum from home-based computer systems and eventually developing a dynamic and innovative AI trading system.

This recent scandal puts South Africa’s reputation in jeopardy as a money laundering destination and does little to enhance its image.

South Africa’s crypto regulation however seems to be catching up with the recent release of the crypto position paper which now gives regulators legal leg room to implement strict AML and KYC regulations on crypto transactions.

RECOMMENDED READING: South Africa’s Mirror Trading International (MTI) Was By Far 2020’s Biggest Scam Globally, Says Chainalysis 2021 Crypto Crime Report

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