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.
Two South African brothers, Ameer and Raees Cajee, have
reportedly disappeared, taking $3.6 billion worth of bitcoin with them. The
incident would make it one of South Africa’s biggest ever incidents related to
crypto. The total amount that’s been recorded as stolen is 69,000 BTC.
The two brothers were the creators of a platform called
Africrypt, which first showed signs of trouble earlier in the year. Investors
hired a law firm to look into the case after Ameer Cajee said that the company
was a victim of a hack in April. At the time, the company held over $4 billion
worth of bitcoin.
He also asked investors not to report the incident to
authorities, which further raised signs of trouble. His purported explanation
was that it would slow down the process of recovering the funds. However, soon
after, investors hired the Hanekom Attorneys law firm to investigate the
incident.
Employees at the firm lost access to back-end platforms
seven days before the founder revealed the alleged hack, according to the
report. The country’s national police force has been assigned to the case,
which has contacted crypto exchanges to ensure that the funds aren’t
liquidated.
However, the bitcoin has been sent through mechanisms that
prevent tracing — tumblers and mixers and large pools of bitcoin, which is
making it hard to track the funds. The company website has also been shut down.
The Cajee brothers launched Africrypt in 2019, promising
investors good returns for their money. This is not the first such incident to
take place in South Africa, with another company involved in a $1.2 billion
scam in 2020. One governmental group in South Africa has called for regulation
of exchanges.
Scams and fraud will only catalyze regulation
The cryptocurrency market, while it has done much to curb
scams, is still subject to some nefarious incidents. Exchanges are working
together to ensure that hackers and fraudsters cannot liquidate their funds,
but it does not form airtight security.
Chainalysis, in its 2021 Crypto Crime Report, noted that illicit
activity as measured by the amount of funds involved had reduced significantly
since 2019, but remained an issue. It totaled over $10 billion in transaction
volume.
These numbers are what is spurring governments to put
regulation in place and place better oversight measures on the market. But
being such a nascent asset class, it is difficult for them to come up with a
one-size-fits-all solution. Furthermore, the decentralized nature of the market
proves to be a tough nut to crack.
Still, governments are putting in resources to form an
effective framework. Global bodies like the Financial Action Task Force (FATF)
and the Bank for International Settlements (BIS) have offered their thoughts on
the matter as well.
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