South African crypto founders disappear with more than $3 billion of clients’ bitcoin

Two South African brothers, who are the founders of cryptocurrency platform Africrypt, have disappeared with $3.6 billion of clients’ bitcoin, according to Bloomberg.

Ameer and Raees Cajee founded the digital currency platform which had 69,000 coins worth $4 billion in April when Bitcoin skyrocketed.

The incident represents the biggest scam in the Bitcoin industry and comes at a time when governments around the world are taking strong stands against the digital currency due to its volatile nature.

According to Bloomberg, investors on the platform noticed worrying signs when the Chief Operating Officer of the company, Ameer, who is the elder of the two brothers, told clients that their platform has been hacked. Cajee went on to tell the investors not to report the incident to lawyers and authorities because it could slow down the recovery process of the missing money.

Investors reported the matter to South African authorities after receiving the ominous notice that they could not access the platform, according to Bitcoin KE that first reported the story.

“We regret to inform you that due to the recent breach in our system, client accounts, client wallets, and nodes were all compromised…,” clients who tried accessing the platform were told.

“Unfortunately, this has forced Africrypt to halt operations … We urge all clients to please be patient as we attempt to resolve the situation. 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.”

A group of investors subsequently hired the law firm, Hanekom Attorneys, while a separate group started liquidation proceedings against Africrypt. The investors also reported the matter to South Africa’s elite police unit, The Hawks.

“We were immediately suspicious as the announcement implored investors not to take legal action,” Hanekom Attorneys told Bloomberg. “Africrypt employees lost access to the back-end platforms seven days before the alleged hack.”

The South African brothers launched Africrypt in 2019 and lured investors by promising them mouthwatering returns. “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 as saying in a joint interview.

According to Yahoo Finance, this is the second time such a development is taking place in South Africa. It reported that in 2020, another company, Mirror Trading International (MTI), bolted with the $1.2 billion of clients’ funds.

Meanwhile, a South African court has granted a provisional liquidation order against the two brothers in favor of about 20 investors. The brothers have until July 19, 2021, to argue against the liquidation.