Another day another exit scam!
Just this time around, it's quite possibly the single largest dollar loss in a cryptocurrency scam to date. The total amount of stolen investor funds is 69 000 Bitcoins, worth a whopping 4.5 billion dollars at April's peak or 2.3 billion at the time of writing this article.
The exit scam perpetrated by two South African brothers who ran a cryptocurrency exchange started in April when Bitcoin was pumping to a record high of $65 000 per coin. At that time, Africrypt COO Ameer Cajee (the older brother) informed clients that the company was the victim of an alleged hack. Furthermore, he asked them not to report the incident to authorities, as it would (in his words) "slow down the recovery process of the missing funds."
Mistrustful clients decided to call in their lawyers which reported the incident to authorities. After being unable to locate the two brothers, the case was handed over to the Hawks, an elite unit of the national police force.
The liquidation process against Africrypt was immediately started although there wasn't much left to liquidate.
The law firm that took the case stated:
“We were immediately suspicious as the announcement implored investors not to take legal action,”
“Africrypt employees lost access to the back-end platforms seven days before the alleged hack.”
Further investigation found that Africrypt’s funds were transferred from its South African accounts and client wallets through a set of tumblers and mixers where they were repeatedly mixed with other coins in order to make the stolen funds untraceable.
Calls to mobile phone numbers of both brothers are being forwarded straight to voicemail, indicating that they are on the run.
At this point, it's blatantly obvious that they've pulled a good old-fashioned exit scam, and have fled to a faraway country with 69 thousand digital cyber hornets watching their back.
The worst part about this story is what's about to follow.
South Africa’s Finance Sector Conduct Authority, although it's looking into Africrypt's case, is currently prohibited from launching an investigation because cryptocurrencies are still not legally considered financial products in South Africa.
It's like they want their people to be victims of such scams.
For the victims, it seems like there is no hope in sight to recover their funds. They will most likely be forgotten like all of the people who lost their Bitcoins in the now infamous Mt.Gox "hack". This marks another depressing day in crypto. Scammers keep scamming, hackers keep hacking, all while manipulators keep crushing the price to buy more cheap coins before the next blast-off.
Extremely difficult times to stay level-headed, especially if your livelihood depends on your portfolio appreciating in value.
Yet still, I manage to stay rather unfazed, for now.
Not sure about you fam but I'm going for a quick run and an hour-long meditation followed by a few greasy nugs.
REMEMBER: Not your keys, not your crypto!
This is the unregulated Wild West ladies and gents, so stay safe!