In what appears like the largest crypto scam in the world as of today, Africrypt, a cryptocurrency investment firm in South Africa, run by two brothers Chief Executive Raees Cajee and Chief Operating Officer Ameer Cajee — is under global scrutiny right now after they disappear with up to $3.6 billion worth of Bitcoin.
The development that appear shocking is that there is no trace of the two brothers who ran the firm that included even some celebrity investors that had endorse the scheme.
It all started two months ago when the Cajee brothers claimed that the firm had been hacked and were therefore forced to stop operations.
The two brothers, then, implored cryptocurrency investors not to alert the police about the matter, adding doing that might jeopardise the recovery of the “stolen” digital coins worth $3.6 billion from the company’s wallet.
The company website is not operational either.
According to a Bloomberg report, calls to the two brothers are being directed to the voice mail. A group of about 20 people has hired a law firm, and courts in South Africa have ordered the provisional liquidation of the company that started two years ago and gave huge returns in the beginning.
Twenty-one-year-old Raees and 17-year-old Ameer are nowhere to be found, but they have until July to appeal against the order, reported The Register.
Ameer Cajee, the Chief Operating Officer of Africrypt, wrote to the investors on April 13 informing them that the investment platform has been hacked which forced them to halt operations.
He elaborated that the company was trying to recover the funds and urged the investors not to inform law enforcement as that might delay the recovery process. Africrypt investors include several high-profile South Africans and celebrities.
A Cape Town law firm representing the victims is suspecting that the two Founders have fled to the United Kingdom with around 69,000 Bitcoins.
The amount involved easily makes it one of the biggest crypto frauds in the world, let alone South Africa. In addition, the law firm found that the brothers transferred pooled funds from the South African bank accounts and clients’ wallets and then broke the Bitcoins into pieces and sent them to mixers.
Meanwhile, Zakira Laher, a cousin of the Cajee brother and a former fellow director at Africrypt, has to deal with a deluge of phone calls — from media and police to investors.
“We really don’t know,” she says, adding that she feared for the safety of her family, including a week-old baby, according to Business Insider. About her position at the firm, Zakria says that her involvement was peripheral and she made no money from Africrypt.
South Africa’s Finance Sector Conduct Authority is mulling a proper investigation into what appears to be a scam of gargantuan proportions, but they, too, are faced with a legal hurdle.
Brandon Topham, the head of enforcement, said that cryptocurrency assets in South Africa were not legally considered financial products.
Investors Need to Be Cautious
Last year, thousands of South Africans were defrauded by Mirror Trading International (MTI), a local Bitcoin trader company that is now under liquidation, for around 23,000 Bitcoins.
However, Africrypt has a different business plan than MTI, which followed a pure multi-level marketing model. But, both the companies claimed to be using computer algorithms for trading cryptocurrencies and generating profits.
Additionally, Cajee brothers lured investors with a guaranteed jaw-dropping 10 percent for daily returns on the investments, a claim which should have immediately raised suspicion.
Though the case has been reported to the Hawks, an elite unit of the South African police, Financial Sector Conduct Authority (FSCA) and the SA Reserve Bank, a tussle is going on over jurisdiction.
“We don’t have jurisdiction, but we are looking at the complaints to see if there is a financial product hidden in there,” said Brandon Topham, Head of enforcement at the FSCA.
South African regulators are already alert to the growing crypto scams and working to bring regulations to the local crypto industry. Furthermore, the central bank barred international transactions for the purchase of cryptocurrencies.
Source: Market Forces