Africrypt Founders And Nearly $3 Billion Worth Of Client Crypto Funds Are Missing After Alleged Hack

Africrypt Founders And Nearly $3 Billion Worth Of Client Crypto Funds Are Missing After Alleged Hack

South African brothers and crypto exchange founders Ameer and Raees Cajee have disappeared, potentially with nearly $3 billion worth of their clients crypto assets.

If you thought the cryptocurrency situation pertaining to China and the recent (and repeated) Bitcoin crashes was a hot mess, you might want to sit down for this because this situation really ups the ante.

According to Bloomberg, Cape Town law firm Hanekom Attorneys has been unable to locate the brothers – who founded the popular Africrypt exchange.

But to make matters worse, their disappearance comes just two months after Africrypt told investors it was the victim of a massive hack and requested they don’t report the incident to authorities as it would “slow down” the recovery of the now-missing funds.

“Our number one priority is retrieving the funds as speedily as possible, however, this process is very wary and will take a substantial amount of time to complete, if successful,” Africrypt said in an email to customers in April.

“We urge all clients to please be patient as we attempt to resolve the situation at hand. It is understandable that clients may proceed the legal route, but we ask clients to please acknowledge that this will only delay the recovery process.”

The total value of the missing funds is currently worth a whopping $2.9 billion. However, it’s worth noting that this value has been calculated after the value of cryptocurrency took a massive hit in recent weeks, so you can only imagine how much more this holding would be worth if and when the market recovers.

Hanekom Attorneys was hired by a group of the victims, who were seeking an investigation into the incident – and the recovery of their funds. Gizmodo Australia is not asserting that the Cajee brothers have personally stolen customers’ money.

While Hanekom has had precisely zero luck in locating the missing founders, it did find that an unnamed person had withdrawn the total pooled funds of the exchange (aka all of the money in customer wallets) and cycled it through tumblers and mixers in an attempt to make it impossible to trace the money.

Essentially, a Bitcoin tumbler combines the “tainted” or stolen funds with other legitimate funds, mixes it all up and spits it back out to random addresses at unspecified times as to make it harder to trace the original coin.

Although tumblers and mixers make it harder to recover and trace stolen funds, it’s not impossible, so there’s a small possibility that the money could be recovered in future.

Interestingly, Hanekom also told Bloomberg that employees lost access to the back-end system prior to the alleged hack.

“Africrypt employees lost access to the back-end platforms seven days before the alleged hack,” the law firm said.

But to make an already messy situation worse, recovering potentially stolen cryptocurrency is significantly harder than legal tender as South Africa does not consider it to be a financial product.

Because of this, South Africa’s Finance Sector Conduct Authority doesn’t actually have the power to launch a formal investigation into the missing funds.

This, combined with the fact that whoever has the funds has tried to cover their tracks by running the money through tumblers and mixers, means that chances of recovering the crypto is slim-to-none.

If it is unable to be recovered, this stands to be the single biggest loss of funds in cryptocurrency history, eclipsing the 2019 loss of $214.5 million when QuadrigaCX founder Gerald Cotten – the only person who could access the company funds – unexpectedly died.

At the time of publishing, the Africrypt website has been disconnected. Gizmodo Australia has been unable to reach out to the Cajee brothers for comment on account of the fact that all contact details have been disconnected or removed from the internet.