Founders of South African Bitcoin exchange disappear after $3.6 billion 'hack'

[jaysabi]

So this makes it the largest loss of bitcoin under such circumstances when you consider the contemporary value of the coins lost.  The exchange, Africrypt, told investors they were the victim of a hack and not to alert the authorities, you know, cuz that's super legitimate.  Some law firm attempting to investigate have tracked the stolen coins to tumblers and mixers to try and obscure where the stolen bitcoin was going.  I guess it remains to be determined if they were actually hacked or stole the money themselves, but the two founding brothers can't be found.

From Endgadget:

Cryptocurrency investors in South Africa may have lost nearly $3.6 billion in Bitcoin following the disappearance of two brothers associated with one of the country’s largest cryptocurrency exchanges. According to Bloomberg, a law firm in Cape Town says it can’t locate Ameer and Raees Cajee, the founders of Africrypt. In April, the exchange told its investors it was the victim of a hack and asked them not to report the incident to the authorities on account it would “slow down” the process of recovering their missing money.

Some of those involved in the exchange hired Hanekom Attorneys, the law firm that said it couldn’t find the two brothers, to investigate the incident. It found that someone had withdrawn Africrypt’s pooled funds from the local accounts and client wallets where the coins were stored originally and put them through tumblers and mixers, making it difficult (though not impossible) to trace the money. “Africrypt employees lost access to the back-end platforms seven days before the alleged hack,” the law firm told Bloomberg. The outlet attempted to call both Cajee brothers multiple times only to get their voicemail each time.

Complicating any recovery attempt is that South Africa’s Finance Sector Conduct Authority can’t launch a formal investigation into the incident because cryptocurrency isn’t legally considered a financial product in the country. If no one can recover the money, it will go down as the largest cryptocurrency loss in history, easily overshadowing the approximately $200 million CAD that disappeared when the founder of Canada’s QuadrigaCX exchange died while travelling in India.

[Sithara007]

It sounds like an insider job. The excuse given by the promoters, that informing the authorities would slow down the recovery of the stolen funds sounds just ridiculous. This was just a delaying tactic, so that these criminals could move the funds to some off shore tax haven. Anyway, now the users can blame themselves. One of the golden rules of investing in cryptocurrency is "not your keys, not your coins". These people did the mistake by keeping their coins in an exchange wallet. Now all they can do is to regret.

[amishmanish]

These Cajee brothers were just 20 and 17 year old kids. While they may have struck the proverbial goldmine with the exchange, it could wholly be possible that they themselves are a victim of the 5-dollar wrench attack.

3.6 Billion is a lot of money. I have no idea what precautions these people took for their safety but young people are prone to boastfulness. If this "disappearance" continue to remain a disappearance, it could as well be that they were gobbled up by someone far more powerful.

The excuse for not investigating is also pretty weak. It has already been a few days and will be impossible to track if something untoward has happened to them. Watch for those proceeds ending up in some politician or powerful policeman's Swiss bank stash.

[Vishnu.Reang]

These Cajee brothers were just 20 and 17 year old kids. While they may have struck the proverbial goldmine with the exchange, it could wholly be possible that they themselves are a victim of the 5-dollar wrench attack.

3.6 Billion is a lot of money. I have no idea what precautions these people took for their safety but young people are prone to boastfulness. If this "disappearance" continue to remain a disappearance, it could as well be that they were gobbled up by someone far more powerful.

The excuse for not investigating is also pretty weak. It has already been a few days and will be impossible to track if something untoward has happened to them. Watch for those proceeds ending up in some politician or powerful policeman's Swiss bank stash.

LOL.. seriously? A 17-year old was allowed to run a multi-billion business? Is this even legal in South Africa? Here in India it is not legally possible. You need to be at least 18 years old to own a private business. And I am even more surprised with the carelessness from the users. They were keeping billions of USD worth of coins in an exchange which is run by a 17-year old? BTW why these two are missing? That makes me suspicious. What if this is an inside job? BTW, the promoters look much older in this photo. Difficult to believe that one of them is 17 years old.

[Kong Hey Pakboy]

It sounds like an insider job. The excuse given by the promoters, that informing the authorities would slow down the recovery of the stolen funds sounds just ridiculous. This was just a delaying tactic, so that these criminals could move the funds to some off shore tax haven. Anyway, now the users can blame themselves. One of the golden rules of investing in cryptocurrency is "not your keys, not your coins". These people did the mistake by keeping their coins in an exchange wallet. Now all they can do is to regret.

It is an inside job, their disappearance isn't a mere coincidence, they could've disappeared any day but they disappear after the hacks. This is the reason why I worry a lot about exchanges, they have the ability to get out of the game without being traced back, this will cast doubt to many people who wil see new exchanges in the future.

[stompix]

Was it really an exchange?
Sounds more like an investing scam:

https://coingeek.com/south-africa-btc-scam-africrypt-makes-off-with-3-8b-asks-victims-not-to-report/

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).

Here is an archived page:
https://archive.vn/8AoqX

Sounds more like the usual ponzi scheme, probably those 3.6 billions (calculated at max peak price) are more likely sums people though they have in their accounts than actual money invested.

Anyhow, sorry to say it, but the ones investing millions with a company run by a 20 and a 17 year old were looking for a way to lose money.

[boyptc]

Was it really an exchange?
Sounds more like an investing scam:

https://coingeek.com/south-africa-btc-scam-africrypt-makes-off-with-3-8b-asks-victims-not-to-report/

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).

Yeah, that sounds like an outright.

Any investment that offers daily returns with a good percentage is truly a scam. Hey, that's a huge amount of money that they've scammed.

It's just a 'hack' exit which is usually being done when they've gathered that much already.

[btc_angela]

Hard to conclude at this point, probably more of an exit scam, this is clearly a Ponzi scheme, and maybe just disguise to be a Bitcoin exchange to look legit to their investors. Unfortunately, they have fallen for the trap and the brothers disappear at this point.

So I don't know what will be the next course of actions for those who have victimised by the scams, until the bothers is found (dead or alive).

[kryptqnick]

It's a huge amount of money they've managed to steal. I've never heard of this exchange (or it is an investment scam?), so I'm surprised they had so much money on their hands. I'm very sorry that many people lost their money there and clearly won't get it back. I think it was an exit scam. If it wasn't, I'm really sorry for the owners as well, but even if they're so young, couldn't they realize that huge finances require top security professionals?
This is just another reminder not to keep money on any exchanges and to deposit the money specifically for the purpose of buying something and withdrawing big sums as fast as possible. Then again, it's impossible to follow this advice if you're a trader because you need a balance on an exchange if you're making many orders regularly. So at least it's important to use the most reputable exchanges that are less likely to steal your money.

[The Sceptical Chymist]

It sounds like an insider job.

Sure does, just like the Livecoin "hack" and it's certainly not the first time we've seen crypto exchanges pull this kind of shit, nor will it be the last I'm sure.

Never heard of Africrypt before, and it makes me wonder what other options South Africans have as far as exchanges go.  Anyone here know what other crypto exchanges they have available to them?

LOL.. seriously? A 17-year old was allowed to run a multi-billion business? Is this even legal in South Africa?

As I said, I didn't know anything about Africrypt so I don't even know if they were doing things legally to begin with.  It wouldn't be hard for a 17-year-old with enough coding/computer knowledge to start up an exchange and even run it, but whether it goes against the law is another story.  There are plenty of shady exchanges out there, likely operating in a gray zone (or outright illegally). 

Interesting story, and yeah--this is yet another lesson to newcomers to never trust your coins with an exchange or whatever this place actually was.

[so98nn]

God Dammit. I gotta think about myself and my past and where the heck I was all these years?
A 17-18 year kids are earning billion dollars? You got to be kidding. And here I am, I’m scared shit when it’s my girlfriend’s birthday because I have to calculate how much stash I have in bank by that time. LOLZ. That’s a slap on my multiple income sources. I think I should be working 30 hours a day. 

Also, in my opinion too it sounds more or less “accompanied” job with these two on one side and someone with political or corporate power. They might have seen the potential of these two and could have offered ransom to do this.

Crazy world man. Everyone bows in front of money.

[Fesatmas]

cases like this create problems when investigating, there is no trace that can be traced if it can be easily removed. the data that is used as a benchmark for investigators will also feel hampered. is this only done by two or three people? with that much money, can you escape and leave this country?

As hack-free as this is, it's impossible to store them in one digital wallet. apart from being shared, it will also be split into several other digital wallets.
As for if it hasn't been found so far, we need to ask the party that manages the exchange, at least they are careless and don't provide complete data.
hacking and taking that much money, took a long time, and they weren't suspicious at all.

[yhiaali3]

Unfortunately, we have heard a lot of these incidents in recent years. These are the faults of centralized platforms. They can steal your money easily, especially if the platform is in a country that does not recognize the legality of cryptocurrencies. It will be very difficult to get your money back or tell the police about the incident, in addition to this like this Incidents have a huge negative impact on cryptocurrency adoption and help spread bad propaganda about the possibility of losing money on Crypto.

[dothebeats]

They should have hinted that there is something wrong when the exchange themselves instructed the investors to not alert the authorities. On thefts and hacks with such a huge amount as this one, the last thing you want to do is to give enough time for the hackers to hide their tracks and do some preparations to disappear. In this case, those who knew that there is something happening doesn't do anything, and coerced other people to do the same. This has to be an inside job, and someone has to pay for it. $3.6 billion is no joke.

[amishmanish]

For those pointing out the 17 year old and getting surprise at him being such a hustler, don't forget that he is a South African, LOL. Think about that other crazy genius from South Africa you keep hearing about..

I guess the history of being sons of Diamond miners and the descendants of crazy sailors who stopped by at the "Cape of Good Hope" does give you some inspiration to be a hustler and try to kick your way out of the all the shit. Especially when they ended up regressing so hard in socio-economic terms by becoming the perpetrators of Apartheid regime. And its hard for them to let go off those questionable pirate ethics. Does anyone remember Hansie Conje and how cricket was tarnished with their match-fixing shenanigans.

Just imagine, if not for racism, South Africa could have been the best example of unity in the world and an inspiration to much of Africa, like Nelson Mandela intended. So much good they could have done. But unfortunately, generations of division cannot suddenly disappear and today, South Africa is really just another developing and dangerous country in the world.

[Coyster]

I mean going by the name of the exchange, scheme, site or whatever and the amount lost in question, it's pretty simple that quite a lot of people still need to put Investing in Bitcoin on hold and learn what the network is all about, and inculcate the security protocols so as to use them in matters relating to crypto.

Having said that, the people whose money make up the $3.6 billion dollars prolly invested more than they can afford to lose, they failed to be their own bank cause if you're not in possession of your keys, whoever is with it can take it at any given time, they were also gullible to believe the trick of not reporting the matter early enough so it wouldn't slow down the investigation process, that's pretty silly for anyone to believe. The victims went contrary to quite a lot of tenets inherent in the network to keep users safe, thus it's no surprise their funds is in the hands of some boys hiding somewhere, or who prolly themselves might have given it up to someone else.

[Vishnu.Reang]

They should have hinted that there is something wrong when the exchange themselves instructed the investors to not alert the authorities. On thefts and hacks with such a huge amount as this one, the last thing you want to do is to give enough time for the hackers to hide their tracks and do some preparations to disappear. In this case, those who knew that there is something happening doesn't do anything, and coerced other people to do the same. This has to be an inside job, and someone has to pay for it. $3.6 billion is no joke.

Africrypt claims that Raees Cajee founded the exchange in 2013, when he was just 13 years old (now he is 20). That itself sounds fishy to me. Is it possible for a 13-year old to set up a cryptocurrency exchange, when significant capital is needed for startup costs? They first announced about the hack in April (although it happened many months prior to that). This is the second major scam involving cryptocurrency in South Africa, with the first one being in 2020 when Mirror Trading International went down with BTC23,000 of client funds.

[Anonylz]

Why the founder have to disappear if he and his exchange are innocent! such a big hack has occurred and he just disappear into tin air, this is clearly an inside job and the actions of the founder looks very suspicious, and to top it all he instructed the victims not to alert the the authorities, who does that! joke of the century, i can't believe they go with such silly request,  another lesson learned, not your keys not your money saying.
between such a young guy in control of such huge amount of money, he his definitely bound to be tempted, the authority should fish him out ASAP.

[Kakmakr]

The title is misleading, because this site is not an exchange.. but rather one of those scam investment companies that are using Bitcoin (Crypto currencies) as the investment option. This AfriCrypt fraud has been compared to the Mirror Trading International scam. (Ponzi Scheme) ==> Africrypt boasted returns of 2-11% a month 

Go read more at https://www.moneyweb.co.za/moneyweb-crypto/africrypt-hack-of-nearly-r54bn-dwarfs-mirror-trading/ and also see that Raees and Ameer Cajee – reportedly disappeared to the UK (A country from where they can be extradited to South Africa) 

[hugeblack]

Fake hacks are always the loophole that enables developers or employees to get free money.
Unfortunately, no one can be sure that the hack was carried out by fraudsters or that it was deceived by the owners of the institution to steal money.
Disappearance will not last forever and the authorities may be able to arrest these criminals.
The problem lies in the difficulty of proving such cases, and the disappearance is an indication that they have done so, but it is not the only one.