Cryptocurrency investors in South Africa may have lost nearly $3.6 billion in bitcoin after the disappearance of two brothers linked to one of the country’s largest cryptocurrency exchanges.
According to information released by international agencies, a Cape Town law firm announced that it could not locate Amir and Raees Kaji, the founders of Africrypt.
Lawyers for investors at the South African crypto exchange, who told clients in April that their accounts had been hacked, say $3.6 billion has disappeared from the platform and the two brothers who ran it cannot be traced.
If Africrypt’s losses are confirmed, they will be among the biggest crypto losses to date. Throughout 2020, losses in the cryptocurrency sector through fraud and other crimes totaled $1.9 billion, down from a record $4.5 billion in 2019, according to intelligence firm CipherTrace.
Amir Kaji, COO of Africrypt, said in a letter to customers on April 13 that all customer accounts had been compromised due to a recent breach in their system. The letter, seen by Reuters, said that AfriCrypt has ceased operations and “initiated the process of attempting to recover the stolen funds.”
He did not give details of how much money was lost and warned clients that trying to recover their money with lawyers “will only delay the recovery process.”
Darren Hanikum, a lawyer representing the investors, said Kaji, his brother and co-founder Rice had not been tracked since the April 13 speech, and that he referred the matter to the South African anti-corruption police, nicknamed the Hawks, on April 16 last.
Filani Nicholas, a spokesman for the Hawks family, said they have not been able to open the case yet because Honeycomb’s attorneys are based in the Western Cape and those seeking their money are in other counties.
To complicate any recovery attempt, the South African Financial Sector Conduct Authority is unable to initiate a formal investigation into the incident because the cryptocurrency is not legally considered a financial product in the country.