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South African ‘Exit Scam’ Sees Brothers Vanish with USD 3.6B in Bitcoin

Tim Alper
Last updated: | 2 min read

An apparent exit scam in South Africa could have left investors out of pocket to the tune of USD 3.6bn after the two brothers who operate the Africrypt project “vanished” following reports of a hushed-up “hack.”

Source: Adobe/Akin Ozcan

Per Bloomberg, Hanekom Attorneys, a legal firm in Cape Town was hired by investors, but claims it has not managed to locate the brothers, who have deserted their offices with the large sum – in bitcoin (BTC). The police are also working on the case, as is the financial regulatory Financial Sector Conduct Authority (FSCA), while the legal firm has reportedly informed “crypto exchanges across the globe” to sound the alarm if anybody attempts to convert the tokens to fiat or altcoins.

The media outlet noted that if confirmed, the Africrypt case would “represent the biggest-ever dollar loss in cryptocurrency scam” history. The platform was set up in 2019, by the two brothers, aged 20 and 21, promising massive returns of up to 11% on crypto stakes.

Meanwhile, the FSCA said all it can do is review complaints because “cryptoassets are not regulated in terms of any financial sector law in South Africa and consequently the FSCA is not in a position to take any regulatory action.” However, they said that they are “in the process of considering declaring cryptoassets as a financial product, which would give the FSCA jurisdiction over these transactions.”

Alarm bells began to ring in April, when one of the brothers, the Africrypt Chief Operating Officer Ameer Cajee told investors that the firm had been hacked – but told them to refrain from reporting this to the police and lawyers, as this would likely “slow down the recovery process.”

But investors immediately saw danger – drafting in lawyers in a bid to recover their tokens. One group hired Hanekom, while another launched a liquidation bid against Africrypt.

However, it appears that the brothers had already planned their move. Hanekom claimed that “Africrypt employees lost access to the back-end platforms seven days before the alleged hack.”

The legal firm claimed Africrypt’s pooled funds were “transferred from its South African accounts and client wallets” into “tumblers, mixers or to other large pools of bitcoin” in a bid to lay the path for their escape.

Their phones then went offline, and the company website followed.

The Primitive Crypto founder Dovey Wan opined on Twitter that the Africrypt “exit scam” reminded her of “what happened [to] PlusToken back in the day,” and backed “Ponzis” to “pop one after another” in the current “low-morale market.”

On Reddit, one poster remarked that the case looked to be an all-too-familiar “honey pot” scam, while on another thread, a poster claimed the brothers had fled to the United Kingdom just two days after informing investors of the “hack.”

Redditors also drew parallels between the case and that of the “missing cryptoqueen” – the OneCoin supremo Ruja Ignatova. The latter’s location is still unknown after her disappearance in 2017, with other OneCoin masterminds now languishing in jail.
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(Updated at 17:31 UTC with a statement from the FSCA.)