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.”
Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.
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