Bloomberg reports that Ameer Cajee and his brother Raees set up Africrypt in 2019 and it provided significant returns for investors. But in April, when Bitcoin hit its peak, Cajee, who was working as the company’s Chief Operating Officer, informed clients that Africrypt had been hacked. He also asked investors not to contact law enforcement as this would slow the recovery process, which raised suspicions.
No surprise that Bitcoin fell on the news. With more and more stories of mass exchange ripoffs it’s obvious that many speculators are scared. This large scale theft may well cause Bitcoin to test 52-week lows. The broader market collapsed.
Even more suspicious was Africrypt employees losing access to its back-end platforms a week before the alleged hack took place. Investors hired Hanekom Attorneys to investigate the matter and found that the company’s pooled funds were transferred from its South African accounts and client wallets to Bitcoin wallets and tumblers, or other large pools of Bitcoins, making them untraceable.
Hanekom has been unable to locate the brothers, who are believed to have fled the country days before the “hack.” The incident has been reported to Hawks, an elite unit of the South African police force that deals with organized crime. South Africa’s Finance Sector Conduct Authority is also looking into Africrypt, though it cannot launch a formal investigation because crypto assets are not legally considered financial products. Global crypto exchanges have also been informed in case any attempts are made to convert the Bitcoins.
Last year saw the now-defunct South African Bitcoin trader, Mirror Trading International, scam 23,000 Bitcoins, the equivalent to $1.2 billion, from investors.
Thodex and Africrypt are not the only exchanges to close due to alleged hacker attacks. This trend was set by the Russian cryptocurrency exchange Livecoin. Unlike businessmen from Turkey and South Africa, the creators of Livecoin did not flee the country with their clients’ bitcoins. On the day the exchange closed, they promised to return all of their remaining funds to users.
China has been aware of many large scale thefts which is why the government moved to protect the public from being scammed. It’s only a matter with ransomware and rampant thefts before more nations crack down.
Faruk Fatih Özer ran off with at least $108 million and many media reports speculate as much as $2-$3 billion. An interpol red notice warrant for the arrest of Faruk Fatih Özer has failed to make an arrest. Speculation that Özer is still in Armenia quietly disappeared from local media reports. Turkey has arrest dozens and so far no leads to an arrest or recovery.
Bitcoin et al mining still use staggering amounts of energy. Combined with rampant thefts its clear the risks are not worth it.