South Africa’s financial regulator disclosed that due to the unregulated nature of cryptocurrency in South Africa, retrieving the alleged $3.6 billion Bitcoin fraud at Africrypt might be difficult.
It added that the investment platform is similar to the Ponzi scheme, the Financial Sector Conduct Authority said all it can do is review complaints because “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.”
“This entity was offering exceptionally high and unrealistic returns akin to those offered by unlawful investment schemes commonly known as Ponzi’s,” the FSCA said in a statement on Thursday. “The public is urged to understand those unrealistically high returns suggests that the investment scheme is likely to be fraudulent.”
Johannesburg-based Africrypt launched in 2019 and was run by South African brothers Ameer and Raees Cajee. The investment platform promised its clients a minimum return which is five times the amount invested, according to a police statement by one investor seen by Bloomberg. In the end, he invested close to R1.8 million ($126,000), the statement said.
Lawyers acting on behalf of a group of clients say the brothers and Bitcoin worth as much as $3.6 billion have gone missing.
Attempt to reach out to the brothers’ proved abortive as calls were directed to a voicemail service.
The matter has been reported to the Hawks, a unit of South Africa’s police force, for investigation, a representative said by email. It has not yet determined where the case would be prosecuted, the representative said.
The FSCA has taken steps to have crypto assets declared financial products as theft related to crypto-assets pile up in South Africa.
“The authority is concerned over the large number of scams being perpetrated by persons purporting to provide the crypto asset to the public,” it said. “The public must be aware of the very large number of unscrupulous players in this sector.
