With the increase in court cases, the founder fled

As investigators delve into one of the country’s largest cryptocurrency thefts, the two South African brothers are under increasing pressure to come forward to the authorities.

Raees and Ameer Cajee are the core figures in the field The now infamous Africrypt cryptocurrency investment plan legendAfter the Cajee brothers claimed that a hacking incident caused the company’s cryptocurrency assets to be stolen, local investors were kept in the dark and their wealth was rolling in.

According to their 2020 investment report, the brothers lead the investment company that is said to bring a huge return on investment. Customers can earn South African Rand or Bitcoin (Bitcoin) Deposited in Africrypt, and Africrypt manages these investments.

In April 2021, Raees Cajee notified investors through a letter that hackers allegedly had stolen its unverified amount, and the matter fell apart. Soon after Cajees pleaded with clients not to choose legal proceedings, the Africrypt website went offline.

There are conflicting reports regarding the actual value of cryptocurrencies managed by Africrypt-but June 2021 report The Wall Street Journal quoted Big Brother’s estimate that at the peak of the market boom in 2021, Africrypt managed cryptocurrencies worth about $200 million.

Investors seek legal counsel to recapture their funds from Africrypt, while financial regulators are bound by South Africa’s current cryptocurrency regulations, which makes the field outside its jurisdiction.

It is worth noting that the Africrypt legend is not the first time that the Cajee brothers’ business has fallen victim to the so-called hacking incident.As early as 2019, RaeCreate Wealth, which was incorporated in Hong Kong and operated by Cajees informed investors, owned some cryptocurrencies Stolen during Binance hackAccording to the company registration documents verified by Cointelegraph, it is not clear whether Cajees ever received compensation for investor losses when registering Africrypt in the same year.

The Kagi brothers disappeared

The exact whereabouts of the Kagi brothers are still unknown. The two previously claimed that they fled from South Africa because of subsequent threats from disgruntled clients who joined forces to seek legal recourse.

The local company Badaspex (Pty) Ltd. is pioneering its own legal efforts to recover the funds invested in Africrypt.the company roll out An application was filed on April 19, seeking to liquidate Africrypt after the plan claimed that it lost investor holdings.

Cointelegraph contacted Gerhard Botha, a Johannesburg lawyer representing Badaspex, and other investors who had lost funds to Africrypt. Botha confirmed that Badaspex is seeking to recover the US$2.4 million (35 million rand) invested in Africrypt, a figure that does not take into account the appreciation of the BTC entrusted to the Cajee brothers. The lawyer represented a total of 105 investors, whose investment losses amounted to what he described as “conservative” US$8 million (115 million rand).

The lawyer also refuted Cajees’s statement in the Wall Street Journal in June that Juan Meyer, the director of Badaspex, was once a figure link The Czech gangster Radovan Krejcir, who was convicted locally, threatened them after the shutdown of Africrypt.

Meyer’s lawyer said his client tried to meet with one of the brothers at a hotel in Johannesburg to discuss the closure of Africrypt. After meeting with the same opinion, Meyer waited at the reception for about 15 minutes, and then the hotel security asked him to leave. Botha told Cointelegraph that the version of the incident proposed by Cajees was “opportunistic” because the incident was clearly stated in the court order application:

“The version proposed by Cajees is regrettable because Mr. Meyer’s interview was recorded in the court application. […] There was no physical contact between the two. The Kagi brothers were allowed to answer that version in court, but they chose not to. “

Soon after the alleged hacking incident, the Cajee brothers hired the legal services of John Oosthuizen, a lawyer in Johannesburg. Oosthuizen made several comments to the media before announcing that he would no longer represent Brother or Africrypt in late June 2021. Africrypt must file a lawsuit against Badaspex’s liquidation order application before July 19.

Another source conducting a private investigation into the Africrypt crash told Cointelegraph that it knew it had opened 35 separate criminal cases and sought to invest approximately US$3.2 million (R46 million) in the program.

Bank documents seen by Cointelegraph show that more than 7 million U.S. dollars (100 million rand) passed through Cajees’ local commercial bank account-this is a point of contention. Refuse By the First National Bank.

It is understood that the brothers left South Africa in December 2020 and have been traced to different hotels in the UAE.

Africrypt is not under the jurisdiction of the South African FSCA

This type of financial fraud usually falls under the jurisdiction of the South African Financial Sector Conduct Authority (FSCA). Cointelegraph contacted the regulatory agency to determine whether it is actively participating in the ongoing investigation of the Africrypt case.

FSCA responded to a public statement that it has issued an acknowledgement of receipt of a complaint against Africrypt and is investigating whether the company has indeed provided financial products or services to the public. This is a crucial aspect because it requires Africrypt to register with the regulator, which it does not. The FSCA statement is as follows:

“At this stage, we only found evidence of crypto asset transactions. Currently, crypto assets are not subject to any financial sector laws in South Africa. Therefore, the FSCA cannot take any regulatory actions.”

Although the FSCA was unable to impose any sanctions on the company, it did state that its own investigation of the company indicated that it was implementing a suspicious investment plan: “The entity provided an unusually high and indifferent level similar to the one provided. The actual return is through an illegal investment scheme, commonly known as a Ponzi scheme.”

In another local report, Raees Cajee claim Africrypt is registered with the Financial Intelligence Center (FIC) and the company has complied with necessary anti-money laundering (AML) controls. Cointelegraph has contacted FIC to determine whether Africrypt is registered with the center, but has not received a response at the time of publication.

The client uses the local exchange to send cryptocurrency to Africrypt

The information provided to Cointelegraph by private investigators allows for some basic blockchain analysis of transactions sent and sent to Bitcoin addresses provided to Africrypt customers in the past few months.

Since November 2020, some customers’ wallets have received BTC from an original wallet, which has received more than 689,000 BTC, valued at approximately US$22 billion. Cointelegraph has determined that this is a hot wallet belonging to Luno, a famous South African cryptocurrency exchange.

CipherTrace, an international blockchain analysis company, provided assistance in this regard, but pointed out that the exchange may only be used to process deposits of Africrypt customers, not to accumulate holdings. A CipherTrace spokesperson told Cointelegraph:

“Of course it is possible to deposit or send some Africrypt funds to the exchange, which may indicate that Africrypt is not an independent’exchange’, but actually more like a high-yield investment plan.”

Marius Reitz, general manager of Luno Africa, told Cointelegraph that Africrypt does not hold a Luno account and there is no relationship between the two companies: “Although Africrypt started the process of applying for a Luno account in 2019, the process has never been completed, so the business account has never been completed. opened.”

Reitz added that Luno had not received any customer enquiries related to Africrypt prior to the news report of the company’s failure. He added that Africrypt has not been flagged by any blockchain analysis company that focuses on detecting and preventing the use of cryptocurrencies in illegal activities. Nevertheless, the exchange has participated in the ongoing investigation:

“Luno has participated and will continue to cooperate with the authorities and related parties. Our preliminary investigation indicated that the amount of the claim appears to have been seriously inflated. In addition, most of the known affiliates and affiliates provided to us do not have Luno accounts.”

The private investigator also told Cointelegraph that after performing a blockchain analysis on the Bitcoin wallet address of another Africrypt client, some of the BTC was allegedly transferred to another popular South African cryptocurrency exchange, VAR.

Farzam Ehsani, CEO and co-founder of VALR, told Cointelegraph that they were unable to share any information about its users, adding that it was registered with FIC and did its best to prevent illegal activities through its platform: “VALR is already in the financial Regulatory agency registration. The Intelligence Center and we regularly cooperate with regulatory agencies to crack down on any activity by actors who try to abuse our industry or cause harm to others.”

Africrypt’s theft amount is “seriously exaggerated”

Initial media reports on the Africrypt legend pinned the number of assets under the company’s management on astronomical figures. The initially touted figure was as high as $3.6 billion-Reitz believes these figures are unlikely:

“At present, the amount of nearly 70,000 BTC claimed to have been transferred seems to be seriously exaggerated. The movement of such a large amount of BTC will bring several red flags to exchanges and blockchain analysis companies, especially considering that it will be within a few hours The argument for moving.”

Reitz also pointed out that the accuracy of the Africrypt project report scale is an important consideration. The absolute scale of the reported initial amount cannot be moved or mixed at all without affecting the cryptocurrency market or being flagged by the analysis company.

Reitz further stated that the following The collapse of Mirror Trading International In 2020, this recent incident is an important reminder for investors to do their homework when entrusting third-party assets:

“Any guarantee of return should be questioned because there is no guarantee of return in cryptocurrency. Many financial fraud schemes are talking about “bots” that conduct transactions on your behalf and provide false recommendation letters as a guarantee or proof of excess returns. It sounds too good to be true, and that might be it.”