Two South African brothers have been accused of making off with billions of pounds’ worth of Bitcoin after their investment firm collapsed.
But a lawyer speaking for the brothers, Raees and Ameer Cajee, said they deny involvement in a “heist” or that they “absconded” with investors’ funds.
The brothers’ company, Africrypt, ceased operations in April after claiming that hackers had compromised the firms’ cryptocurrency wallets.
“Our system, client accounts, client wallets and nodes were all compromised,” wrote Africrypt chief operating officer Ameer Cajee on 13 April.
He promised to keep investors up to date as an internal investigation progressed, but no further communications were received. The company’s website is now inactive.
Law firm Hanekom Attorneys, which was hired by some of Africrypt’s investors to pursue the matter, said the brothers left South Africa for the UK within days of the “hack”.
Ameer Cajee also urged investors not to “proceed the legal route” as this would “only delay the recovery process”.
In a complaint to police, Hanekom estimated the value of the firm’s Bitcoin holdings at £2.6bn ($3.6bn), based on an analysis of the sums transferred out of Africrypt’s accounts.
The law firm said the sum has now been “dissipated in its entirety”.
Tracing the funds, it said, was complicated by the use of “various dark web tumblers and mixers”, methods for concealing the flows of Bitcoin and other cryptocurrencies.
Hanekom noted that one of the transfer addresses supposedly used by hackers to abscond with the funds was used for a normal transaction prior to the alleged breach, indicating an inside job.
The law firm said that in retrospect, Africrypt shows all the signs of a scam, with the Cajee brothers posting images of themselves with luxury cars and promising unrealistic returns of up to 11 percent a month or more.
It said it was “suspicious” of the brothers’ claim to have mined more than 100,000 Ethereum coins using home-based computer systems, given the country’s high electricity costs and unstable power-generating systems.
For comparison, Hive Blockchain Technologies, a Toronto Stock Exchange-listed professional cryptomining firm, mined only 71,660 Ethereum coins in 2020.
Africrypt’s investors included high-profile South Africans and celebrities, according to local media reports.
But Darren Hanekom of the Hanekom law firm told South African news site Moneyweb that the large sums apparently handled by Africrypt were unlikely to have all come from within the country, with Africrypt possibly involved in an international money-laundering operation.
In January 2021 Africrypt said it managed “over $100m” in investors’ assets.
Lawyer John Oosthuizen, who represents the Cajee brothers, told the BBC the brothers “categorically denied” they had been involved in a “heist” or had stolen funds.
“There is no foundation to the accusation and there’s no merit to those accusations,” Oosthuizen said. “They maintain that it was a hack, and they were fleeced of these assets.”
He said the brothers had received death threats and had acted to keep themselves and their families safe, adding they were young men aged 18 and 20 with “very little life experience”.
South Africa’s Financial Sector Conduct Authority (FSCA) said in a statement that crypto-assets are not regulated in the country and “consequently the FSCA is not in a position to take any regulatory action”.