Categories: Bitcoin

Founders flee legal proceedings

Two South African brothers face mounting pressure to report to authorities as investigators delve deeper into one of the largest crypto thefts in the country.

Raees and Ameer Cajee are central figures in the now infamous crypto investment saga Africrypt. Local investors were left in the dark and lost after the Cajee brothers claimed a hack that resulted in the theft of the company’s crypto assets.

The brothers run an alleged investment firm that promises attractive returns in 2020, according to an investment presentation. Customers can deposit South African Rand or Bitcoin (BTC) into Africrypt and then manage these investments.

Everything collapsed in April 2021 after Raees Cajee wrote a letter to inform investors that hackers allegedly stole an unconfirmed portion of their holdings. Shortly after Cajees asked customers not to opt out of legal proceedings, the Africrypt website went offline.

There have been conflicting reports about the real value of cryptocurrencies managed by Africrypt – but a June 2021 Wall Street Journal report cited the oldest brother’s estimate that Africrypt was holding around $ 200 million in crypto at the time of the 2021 market boom.

Investors have sought legal advice to reclaim their funds from Africrypt while financial regulators have been hampered by current crypto regulations in South Africa and have created space outside their jurisdiction.

It’s important to note that the Africrypt saga isn’t the first time the Cajee brothers’ businesses have fallen victim to alleged hacks. In 2019, RaeCreate Wealth, which is founded in Hong Kong and operated by informed Cajees investors, got some of its cryptos stolen in a Binance hack. It’s unclear whether investors will ever be reimbursed for their losses when Cajees signed up for Africrypt that same year, according to company registration documents verified by Cointelegraph.

The Cajee brothers have disappeared

The exact whereabouts of the Cajee brothers are still unknown, and the couple had previously alleged that their escape from South Africa was compelled by subsequent threats from a number of angry customers who had regrouped to seek legal assistance.

Local Business Badaspex (Pty) Ltd. is leading its own legal efforts to recover its investment in Africrypt. The company filed a liquidation motion for Africrypt on April 19 after the program claimed it had lost investors’ shares.

Cointelegraph reached out to Johannesburg-based attorney Gerhard Botha, who represents Badaspex, as well as other investors who have lost money to Africrypt. Botha confirmed that Badaspex plans to reclaim $ 2.4 million (35 million in profit) invested in Africrypt, a number that doesn’t take into account the appreciation in value of BTC delivered to the Cajee brothers’ company. The attorney represented a total of 105 investors whose lost investments amounted to $ 8 million, which he describes as “conservative” (115 million gains).

The attorney also denied Cajees’ allegations in the WSJ in June that Badaspex director Juan Meyer, a figure with known ties to local convicted Czech gangster Radovan Krejcir, threatened her after the Africrypt shutdown.

Meyer’s attorney said his client tried to meet one of the brothers at a Johannesburg hotel to discuss the closure of Africrypt. After agreeing to meet, Meyer waited about 15 minutes at the front desk before hotel security asked him to leave the premises. Botha told Cointelegraph that the version of events presented by Cajees was “opportunistic” as the facts were clearly set out in the court appeal:

“The version given by Cajees is unfortunate because Mr Meyer’s visit was noted in the court’s application. […] There is no physical interaction between the two. The Cajee brothers were allowed to answer this version in court and decided not to do so. “

The Cajee brothers used the legal services of Johannesburg-based attorney John Oosthuizen shortly after the alleged hack. Oosthuizen made several comments to the media before announcing that it would no longer represent the brothers or Africrypt in late June 2021. Africrypt has until July 19th to submit an application.

A separate source, who is conducting a separate investigation into the Africrypt incident, told Cointelegraph that it was aware that 35 separate criminal cases were initiated to find approximately $ 3.2 million (46 million coins).

Bank documents reviewed by Cointelegraph show that more than $ 7 million (100 million interest) was transferred to Cajees’ local bank account – a point of contention dismissed by First National Bank.

The two brothers are believed to have left South Africa in December 2020 and been followed to various hotels in the United Arab Emirates.

Africrypt is not under the jurisdiction of the FSCA of South Africa

This type of financial fraud is usually the jurisdiction of the South African Financial Sector Authority (FSCA). Cointelegraph has reached out to the regulator to determine if the agency is actively involved in the ongoing investigation into the Africrypt affair.

The FSCA responded with a public statement acknowledging the complaints made against Africrypt and investigating whether or not the company is actually offering a financial product or service to the public. This is an important aspect as Africrypt would need to be registered with the regulator, which it is not. The FSCA statement reads:

“At this point we only found evidence of crypto asset transactions. Currently, crypto assets are not regulated by any financial sector laws in South Africa and, as such, the FSCA does not have the authority to take legal action. “

While the FSCA has no authority to impose sanctions on the company, it has stated that its own research into the company shows it has a worthy investment plan. Suspicious: “This company has produced exceptionally high and unrealistic returns like this one.” offered by illegal investment schemes commonly known as Ponzis. “

In another local report, Raees Cajee stated that Africrypt is registered with the Financial Intelligence Center (FIC) and that the company has complied with required anti-money laundering (AML) controls. Cointelegraph has reached out to the FIC to determine if Africrypt is registered with the hub but has not yet received a response at the time of publication.

The customer used the local exchange to send crypto to Africrypt

Information provided to Cointelegraph by private investigators has enabled some basic blockchain analysis of transactions sent to and from Bitcoin addresses made available to Africrypt customers over the past few months.

Several customers’ wallets who received BTC from the original wallet had received over 689,000 BTC worth approximately $ 22 billion by November 2020. Cointelegraph has confirmed that this is a hot wallet belonging to South Africa’s famous electronic luno wallet.

International blockchain analytics firm CipherTrace helped in this regard, but noted that the exchange can only be used to process Africrypt customer deposits and not to build stocks. A CipherTrace spokesperson told Cointelegraph:

“It is certainly possible that some Africrypt funds have been deposited or sent to this exchange, which could be a sign that Africrypt is not an ‘independent exchange’ but is actually an investment program – more productive.”

Luno Africa’s general manager, Marius Reitz, told Cointelegraph that Africrypt does not have a Luno account and there is no relationship between the two companies: “Although Africrypt started applying for a Luno account in 2019, the process never was closed and thus the business account was never opened. “

Reitz added that Luno had not received any customer inquiries about Africrypt prior to reports of the company’s demise. He added that Africrypt has not been flagged by any blockchain analytics company focused on detecting and preventing the use of cryptocurrencies in illegal activities. The exchange involved in the ongoing investigation:

“Luno is committed and continues to work with the authorities and interested parties. Our preliminary investigations have shown that the amount claimed was apparently overstated. In addition, the majority of the well-known affiliates and affiliates offered to us do not have a “Luno Account”.

Private investigators also told Cointelegraph that some BTC were believed to have been transferred to VALR, another popular South African crypto exchange, after performing a blockchain analysis on a wallet address, other bitcoins from Africrypt customers.

Farzam Ehsani, CEO and co-founder of VALR, told Cointelegraph it was unable to divulge information about its users, adding that it was registered with the FIC and had done everything possible to prevent illegal activity through its platform : “VALR is registered with the Ministry of Finance Intelligence Center and we regularly work with regulators to combat any activity by actors who try to abuse our industry or harm others”.