Cryptocurrencies are still finding their space in today’s economy. While several factors argue their cause, their regulation seems to be impossible in many ways. A recent incident serves as an unwanted example of the same.
A cryptocurrency investment firm based in South Africa is now being blamed for duping investors of about 69,000 Bitcoin, approximately worth $3.6 billion. Founded by a pair of brothers, the local firm shut down its operations after telling investors that the funds were stolen by hackers.
The incident was reported recently to Hawks, South Africa’s Directorate for Priority Crime Investigation (DPCI) or an elite unit of the national police force. The matter was reported by a law firm in Cape Town after the two brothers could not be located.
A report by Bloomberg highlights the case. It states that Ameer Cajee, the older brother of the two, who served as the AfriCrypt Chief Operating Officer, first informed investors of a hack on the company’s accounts in mid-April. At the time, Cajee asked customers not to report the hack to authorities, claiming that any investigation would slow down the recovery process.
Following the mail, some of the investors contacted a law firm to investigate the matter. The law firm discovered that the backend access for AfriCrypt was taken away from the company’s employees seven days before the alleged hack.
The company’s pooled funds, lying in its South African accounts as well as client wallets, were then transferred in the form of Bitcoins to avoid any traces of the subsequent transactions.
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Following the money laundering, the two brothers stopped taking any calls, while the company’s website also went down. The report mentions that South Africa’s Finance Sector Conduct Authority is also looking into the scam. Although, since cryptocurrency is not officially recognised as a financial product in the country, it cannot launch a formal investigation into the matter.
If the scam turns out to be as predicted, AfriCrypt might become the biggest cryptocurrency scam seen to date. The incident is a shocking example of how the decentralised nature of the cryptocurrency can be used for illegal motives like money laundering, creating a perfect cover for such criminal activities.
Source – IndiaToday