Daily Management Review

Biggest Cryptocurrency Scam Seen In South Africa?


AfriCrypt claimed it was a target of hacker before its founders disappeared while later investigation found that “the firm laundered its holdings in the form of Bitcoin”.

Cryptocurrencies are in the process of creating a place for themselves in the economy, many reasons are in their favour while certain arguments are against “their cause” and in many ways “their regulation seems to be impossible”. The same was reinforced by a recent turn of event wherein an investment firm that deals solely in cryptocurrencies is charged with conning investors for a cumulative amount of “69,000 Bitcoin” which is equivalent to nearly “$3.6 billion”.
The above mentioned firm was based out of South Africa and locally founded by two brothers which informed its investors that hackers stole its funds stating it to be the reason for shutting down the company. Moreover, Hawks, the “Directorate for Priority Crime Investigation”, in short DPCI of South Africa was also brought in the picture. Once both the founding brothers were off the radar, one Cape Town based law firm reported the matter to the authorities.
Bloomberg in one of its reports covers the case whereby highlighting the fact that the older of the two brothers, Ameer Cajee worked with the AfriCrypt as its Chief Operating Officer. It was Cajee who first broke the news of “company’s accounts” being hacked in mid-April to the investors. However, Cajee had also urged the clients to keep the news of hacking under wrap instead of involving the authorities. According to him, the recovery process will get affected and in turn become slow in case of “any investigation”.
Nevertheless, upon receiving a mail with the above mentioned information, “some of the investors” reached out to a law firm for investigating into it. As per the latter’s investigations, it was revealed that the employees of the company had lost AfriCrypt’s “backend access” a week prior to the “alleged hack”.
Subsequently, the “pooled funds” of the company from its “client wallets” and its accounts in South Africa were converted into Bitcoin in order to “avoid any traces of the subsequent transactions”. It is post the “money laundering” incident that both the brothers went off the radars as they were unreachable on phone while the website of the company also “went down”.
According to the report, the “Finance Sector Conduct Authority” of South Africa is also involved in the investigation. However, no “formal investigation” was launched for the matter since cryptocurrencies aren’t “officially recognised as a financial product in the country”.
If AfriCrypt’s alleged scam is proven, it will be seen as the “the biggest cryptocurrency scam” till date. Furthermore, the said incident throws light on the shocking possibilities of the outcomes of decentralised cryptocurrencies and its potential to become a “perfect cover” tool for “illegal motives like money laundering”.