SA brothers' massive crypto 'heist': Financial watchdog says it was outside its ambit

accreditation
0:00
play article
Subscribers can listen to this article
Currently crypto currencies are not legally regarded as financial products, but South Africa is considering regulating trading.
Currently crypto currencies are not legally regarded as financial products, but South Africa is considering regulating trading.

Two South African brothers who ran a cryptocurrency platform - Africrypt - have "vanished" in what is believed to be the biggest-ever cryptocurrency heist.

The Cajee brothers, Ameer and his younger brothe Raees, vanished along with $3.6 billion (R51 billion) in Bitcoin, according to a Bloomberg report.

Earlier on Thursday, Bloomberg reported that the brothers were being investigated by a Cape Town law firm which had been hired by investors, who became suspicious earlier this year after having been informed that there had been a hack. The firm has reported the matter to the Hawks. 

Fin24 reached out to Hanekom Attorneys for further details. No response had been received by deadline.

The disappearance of some 69 000 coins, which were worth more than $4 billion (R57 billion) at their peak in April, reportedly represents the biggest-ever dollar loss in a cryptocurrency scam. 

An investigation by the law firm suggests Africrypt's funds were taken from its local account, Bloomberg reported.

Regulator the Financial Services Conduct Authority told Fin24 on Thursday that it was aware of the complaints made against Africrypt and that it was investigating these to see whether a financial product or service was offered to the public, which would have required the platform to be registered. 

"At this stage we have only found evidence of crypto asset transactions. Currently crypto assets 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," it said.

Currently crypto currencies are not legally regarded as financial products, but South Africa is considering regulating trading. 

The regulator warned that there was a high risk associated with investing in crypto assets and that there was a large number of scams by people claiming to be legitimate intermediaries. Unrealistically high returns are a red flag, the FSCA added, urging the public to seek advice from properly licenced financial service providers. 

Last year a local Bitcoin trader, Mirror Trading International, collapsed.

Fin24 reported that the platform collapsed in early December after it stopped paying out returns to investors and its founder, CEO and sole director Johann Steynberg went missing.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
14.97
-0.9%
Rand - Pound
20.59
-0.7%
Rand - Euro
17.37
-0.8%
Rand - Aus dollar
11.23
-0.8%
Rand - Yen
0.13
-1.4%
Gold
1,787.09
-0.3%
Silver
23.95
-0.9%
Palladium
1,993.00
-1.0%
Platinum
1,018.26
-1.0%
Brent Crude
86.40
+0.5%
Top 40
60,797
-0.4%
All Share
67,494
-0.3%
Resource 10
63,048
-0.7%
Industrial 25
87,148
-0.3%
Financial 15
14,043
+0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Facebook is facing a fresh crisis after a former employee turned whistle-blower leaked internal company research . Do you still use Facebook?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, the benefits outweigh the risk for me
26% - 326 votes
No, I have deleted it
44% - 549 votes
Yes, but I am considering deleting it
29% - 366 votes
Vote