Two brothers from South Africa vanished alongside billions worth of bitcoin investments from their cryptocurrency investment platform Africrypt.
According to newswire Bloomberg, the sum totals to around $3.6bn (£2.6bn, €3bn).
Their lawyer, however told BBC News that they “categorically denied” any involvement in the “heist” or that they absconded with the funds.
A Cape Town-based law firm was hired by investors as they could not locate the two brothers, which reported the matter to an elite unit of the country’s police force.
In April, as bitcoin was reaching a record high, the platform’s chief operating officer and elder brother Ameer Cajee informed clients that the company has been a victim of a hack.
He asked them to not report the matter to either lawyers or the authorities as it would have slowed down the recovery of the missing funds.
But some investors remained sceptical and hired law firm Hanekom Attorneys to look into the matter, while a separate group began liquidation proceedings against Africrypt.
According to Anekom’s investigation, the platform’s funds were transferred from its South African accounts and client wallets and the coins went through tumblers and mixers – or even larger pools of bitcoin – which has in effect made them untraceable.
The company was set up in 2019 by Ameer and his younger brother Raees. Its website is currently down.
Ponzi scheme similarities
The country’s regulator has its hands tied at the moment, because cryptoassets are not yet formally recognised as financial products.
The Financial Sector Conduct Authority (FSCA) said: “The FSCA confirms that it is aware of the concerns regarding investments made by the public in Africrypt and that we are continuing to investigate complaints for indications of whether or not a financial product or service was offered to the public, which would have required Africrypt to be registered with the Authority.
“At this stage we have only found evidence of cryptoasset transactions. Currently, cryptoassets are not regulated in terms of any financial sector law in South Africa and consequently the FSCA is not in a position to take any regulatory action.
“The Authority has warned the public and continues to do so with respect to the high-risk nature of investing in cryptoassets.
“To protect the public, the Authority is in the process of considering declaring cryptoassets as a financial product, which would give the FSCA jurisdiction over these transactions. Despite this, the public is once again warned that cryptoassets are a highly speculative and risky area which is not appropriate for the majority of investors in South Africa.”
But the watchdog added that the practices of Africrypt mirror the ones used in “Ponzi” schemes.
It continued: “The public is urged to understand that unrealistically high returns suggests that the investment scheme is likely to be fraudulent. Moreover, no investments should be made without seeking the assistance and advice of properly licensed financial service providers who should only offer products from legitimately licensed financial institutions.”
