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Africrypt ‘hack’ of nearly R54bn dwarfs Mirror Trading

The founders of the company, Raees and Ameer Cajee, have reportedly disappeared to the UK – while investigators say the ‘hack’ reeks of something more sinister.
It seems the funds ‘were subjected to various dark web tumblers and mixers, resulting in severe fragmentation’. Image: AdobeStock

While hundreds of thousands of investors were scrambling to find out what happened to funds they had invested in failed crypto scam Mirror Trading International (MTI), a far bigger crypto disappearing act was playing out without hardly anyone paying attention.

Africrypt, which reportedly counts several high profile South Africans and celebrities among its investors, was hacked on or about April 13.

A staggering $3.6 billion (roughly R54 billion) was swiped out of multiple wallets controlled by directors of the company in a matter of hours.

This is according to an analysis, conducted by Hanekom Attorneys, of blockchain transactions involving wallets controlled by Africrypt.

The ‘hack’ is deemed extremely suspicious by investigators, not least because the two founders of Africrypt – Raees and Ameer Cajee – reportedly disappeared to the UK within days of this happening.

Though the investigation is still ongoing with multiple regulatory authorities now looking into it, this may turn out to be one of the biggest financial scandals in SA’s history. Not quite Steinhoff-scale, but way larger than MTI.

The reason Africrypt attracted such little public attention was that clients were asked not to alert authorities as this would frustrate the recovery of assets from the hackers. That, according to Hanekom Attorneys, which represents several Africrypt clients, allowed the perpetrators time to make good their escape with crypto worth more than R50 billion.

It begs the question: how did a low-key crypto company with a trading history of little less than two years end up with crypto assets of nearly R50 billion (nearly five times the size of MTI)?

Darren Hanekom of Hanekom Attorneys believes it is unlikely all these funds came from South Africans, saying it was more likely a money laundering operation for international players, of which the Cajees were just a part.

Also suspicious is the fact that clients were requested to sign an investment agreement with Hong Kong-based RaeCreateWealth Limited, which limited the liability of the company for virtually any kind of loss. The agreement is so weighted in favour of RaeCreateWealth Limited that it exonerates it from any hacks – but this contractual limitation of liability does not apply where a crime has been committed.

Not good for SA’s reputation

Whether this was an international money laundering operation or not, the case does little to enhance SA’s reputation as a safe haven financial centre, coming so soon after the collapse of MTI, and brings urgency to the growing clamour for crypto regulations.

Some clients are known to have invested R1.5 million, with a few as much as R15 million and R20 million.

While some Africrypt clients are known to have been paid commissions for referring new clients, it does not appear to have been a multi-level marketing scheme (unlike MTI).

The real success of the company was its ability to scout for clients among a relatively limited pool of high-net-worth investors who knew each other.

While MTI was offering returns of up to 10% a month using a trading bot, Africrypt’s sales pitch was even more outrageous, with some clients being promised 10% a day, also using a computerised algorithm. Clients were invited to choose between a conservative, moderate and aggressive investment approach.

Read: Be aware: Here are some of the common investment scams

In an investor presentation, Africrypt boasted returns of 2-11% a month depending on whether you chose a passive, passive-aggressive or aggressive portfolio. In the 20 months to August 2020, there was not a single losing month.

The results were so mouth-watering that it was treated as something of a secret among the inner circle admitted to this exclusive club.

Hanekom says Africrypt bore all the hallmarks of a scam, with the Cajees posting pictures of their luxury cars and boasting on social media about their extensive experience in cryptos: “Whilst we are aware of the many opportunities available for young people in the cryptocurrency space, we were suspicious of the claims that over 100 000 Ethereum coins were mined from home-based computer systems. Given South Africa’s high electricity costs, and unstable power generating capabilities, we found this claim particularly difficult to accept.”

By way of comparison, Toronto Stock Exchange-listed Hive Blockchain Technologies, a professional crypto mining firm, mined just 71 660 Ethereum coins in 2020.

In an investor presentation, 21-year old Raees Cajee – the founder and CEO – says he first learned of bitcoin in 2009 while watching the news with his father “and ever since he was hooked”. Raees would have been about eight at the time. He apparently started mining Ethereum while still at school and was “soon building his own Artificial Intelligence models which developed into an AI driven trading system,” according to the presentation.

“It was this dynamic and innovative trading system that has fuelled Africrypt’s astronomical growth from a one-man operation running out of a bedroom to, to one of Africa’s largest and most successful AI trading companies in only a few years.”

Read: Protect your livelihood: Do not take the bait

Hanekom Attorneys has notified crypto exchanges around the world in the hope of intercepting any of the addresses and crypto marked as suspicious should they be presented for sale.

Source: Africrypt Investor Presentation 2020

The matter has been reported to the Financial Sector Conduct Authority (FSCA), the Hawks and the SA Reserve Bank.

“This was different to MTI in one crucial respect,” says Hanekom. “In the case of MTI, clients were required to purchase bitcoin on a local exchange and ship it to an MTI bitcoin wallet.

“In the case of Africrypt, they were required to deposit funds into an FNB account which would then be used to purchase bitcoin, often on Luno. That bitcoin would then be broken up and mixed with other transactions to disguise the source.”

A Companies and Intellectual Property Commission (CIPC) database search shows Africrypt (Pty) Ltd was registered in July 2019, with two active directors: Raees Cajee and Niranjan Patel. The company’s address is listed as 49 Glenhove Road, Melrose in Johannesburg, shown below.

Africyrpt HQ in Melrose, Johannesburg

Source: Google Maps

Two other companies bearing similar names were later registered: Africrypt Investments was registered in January 2020, and Africrypt OTC in March 2021. None of these companies are listed as having auditors.

According to a report by Hanekom Attorneys: “R54 billion has been transferred from its South African account(s) through bitcoin on the blockchain, and has regrettably, now been dissipated in its entirety. Whilst we are still in the process of investigating the transfer of funds, with transactions on the blockchain being active up and until even date, upon an initial reconciliation, it seems that the funds were subjected to various dark web tumblers and mixers, resulting in severe fragmentation.”

One reason the ‘hack’ is extremely suspicious, says Hanekom, is that one of the addresses used by the so-called hackers was used for a normal crypto transaction prior to the hack.

This points to an inside job.

On April 13, chief operating officer Ameer Cajee sent the following message to clients:

Dear Client,

We regret to inform you that due to the recent breach in our system, client accounts, client wallets and nodes were all compromised. At this point it is unknown to us the extent of personal client information breached during the attack.

Unfortunately, this has forced Africrypt to halt operations. We have begun the process of attempting to retrieve stolen funds and compromised information. 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. Furthermore, we have begun a full system audit to determine the extent of the breach.

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.

Clients will be kept updated on progress made in the recovery process and with any information regarding the parties involved in orchestrating the attack on our systems.

The company’s website has since gone offline and all further communications have ceased.

Says Hanekom: “This is many times bigger than MTI and in many ways more clever in the way it was set up and executed.

“Imagine making R54 billion disappear within 24 hours.”

He adds: “Our further analysis of the blockchain links the flow of cryptocurrency transactions to certain large local exchanges. We trust that these exchanges will be open to disclosing information relating to wallets used by Africrypt or their proxies.”

Brandon Topham, head of enforcement at the FSCA, says: “We don’t have jurisdiction but we are looking at complaints to see if there is a financial product hidden in there.”

Read: SA bitcoin ‘ponzi’ scheme out of regulator’s reach

Listen to Nompu Siziba’s interview with Moneyweb’s Ciaran Ryan:

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It’s a major multi-billion rand scam a week in South Africa these days. If its not the cadres feeding at the trough, if its not the state capture artists pocketing billions, if its not god-preaching pastors selling tickets to heaven, its the new “entrepreneurs” promising eye watering returns thru ponzi schemes.
Note how every scam artist is allowed to leave the country (with all the loot)!!
And remember, no one in S.A. is accountable for anything.

a 17 and 20 year old.. imagine !

The investor claims Raaes is a childhood prodigy who was able to create a trading algorithm that allowed them to trade while they attended school.

“the brothers had “a certain level of politeness” and were easy to talk to,”

Selling tickets to heaven – lol

R54 billion? And the CEO is 20 years old as per the image in the article?

This will probably get deleted but here goes:
“As jy dom is, of gulsig is, gaan jy kak”

It hasn’t been deleted yet – that means they agree with the statement! Maybe we should all just comment in Afrikaans, then our comments won’t be deleted and we can express ourselves better in our mother tongue. Most commentators and readers are Afrikaans-speaking anyway, and those who are English-speaking are sophisticated and experienced enough to understand and read Afrikaans.

En dan gaan die manne my nie spot oor my Engels nie!

”K@k”, se die koning – en daar wasn geweenen n gekners van tande!

Wet van Transvaal.

Was it Warren Buffett who said the crypto craze would end in tears?

A lot of this money was probably stolen from taxpayers.

Meng jou met semels dan vreet die varke jou op!

Some more people will live with their kids during old age.
It is the greed, stupidity and the gambling addiction.

Does anyone have any idea how much is R 54 Billion?
Plus it does not end there, SARS will also knock at their door.

You always listen to Crypto investors and they all tell tha how t the Investment is unregulated and Givernment can’t touch your money . When they get scammed the first thing they do is a get a lawyer ie they turn to the law for help ! This is why Crypto will never survive or amount to anything unless regulated . The trust factor is falling through while we speak !!! Non of us are huge fans of regulation but it is one the reason we drive on one side of the road and not the other ….most of us anyway ! We need laws , period .

HS! Most crypto owners hold their money direct. It’s greedy people who fall for scam artists that lose their money – of which crypto is still just a minor component compared to all the fiat-based scams out there. A fool and his many is soon parted. Don’t. Give. Someone. Control. Over. Your. Crypto. Ever.

Lol But.. but.. they were promising me returns of over 20% a month!!

I agree but must say I think that Crypto is only the smoke screen here and therefore not even worth debating the validity of crypto in this case. Scamsters love it because of it’s complexity and perceived returns (the story fits). IMHO this is a typical Madoff, deposit money and get dot matrix statement monthly showing steady returns but invest in ZERO. In this case, deposit money in FNB account, get online account showing impressive returns, draw money out for own use and when clients ask for money plead online theft and disappear.

Agreed, no hack here, money laundering pure and simple. I doubt you will find one investor complaining of a loss.

ever tried to get money out of your beloved bank.. read the terms and conditions “if you make an error on an ETF payment, sorry for you its gone!” The whole point of crypto is get away from this type of rubbish. If investor want to entrust their money to a 20 year old, well what do you expect?! This is NOT how crypto is designed or should be used

OK now do ‘I paid crypto to the wrong person’…

Who listens to a 21 year old investor???

Not Warren Buffet ….

Grown men and women throwing their money away….
” I didn’t think it was a scam ”

Individuals buy crypto because it offers anonymity, ease of transfer across borders, a store of value, low transaction cost, no KYC process, and because transactions do not leave an audit trail.

It is for exactly the same reasons that terrorist organizations, drug smugglers, and tax evaders use uncut diamonds and rhino horns. Bitcoin is competition for the uncut diamond and rhino horn market, but more relevant to the topic, people invest in bitcoin because it offers them an opportunity to break the law. They disregard various laws on tax evasion, the Banks Act, Money Laundering, and financing of terrorist activities.

In short -the incentives for bitcoin traders are aligned with that of diamond smugglers. Crypto offers a more sophisticated, more secure, cheaper, and seamless opportunity than diamonds and rhino horns.

The point is – if the investor mingles and associates with criminals and partake in criminal activity, how can such an investor expect not te a victim of criminal activity? Many smugglers of uncut diamonds, unofficial gold, and rhino horn get scammed on a regular basis. Nobody reports on it. Dead bodies are found in the field somewhere as they solve the problem themselves.

In this case, nobody wants the FSCA to spoil their fun until they get scammed by their “partners” and then they blame the FSCA.

Think you are confusing Crypto with Cash;

You cannot buy Crypto with Fiat Currency on an Exchange without doing KYC;
Crypto on and off ramps ensures Crypto is NOT anonymous;
All Crypto has audit trails; this is the very nature of the Blockchain.

So, as long as these funds are being tracked wallet to wallet in however many bits & pieces, they will never ever be able to cash-in to Fiat Currency without being caught unless they sell privately, in which case the purchaser is in possession of stolen assets which can be attached.

Your assertion that Bitcoin is competition to other illegal activities is predominantly false as criminals prefer anonymity. Only stupid criminals use Bitcoin…

Thanks for the reply.

Crypto is unregulated but somehow one can become “…in possession of stolen assets which can be attached.”
To establish ownership requires laws (which don’t apply with crypto). No?

Just because Crypto is not regulated does not mean that it is not subject to law…criminal law, tax law, civil law & others in every jurisdiction worldwide.

Ownership of Crypto is traceable through on and off ramps out of/into fiat currency.

There are a few ways they could gain access to some of the funds though if I’m not mistaken, but in small quantities? Wouldn’t they be able to get some out through a bitcoin atm a few thousand a day?
Also if you do a USDC loan you could wire the USD to a new bank account. They’ll have some time before they can no longer open any bank accounts globally?
Does Binance still let you sell BTC without KYC? They used to have the option for smallish amounts.

It feels that through DEFI exchanges they could switch it to less traceable crypto? Perhaps I underestimate the authorities in their technological capabilities though.

All BTC ATMs have registered owners, so the end holder can be identified.

When you do a loan with BTC collateral, a visible smart contract is generated linking the two wallets.

Binance has been notified; they will red flag the deposit address & freeze the account.

The thieves may use a privacy coin like XMR which is difficult to trace unless the trackers have access to CipherTrace software which can trace all XMR transactions.

Also don’t forget the FBI recently recovered ransom paid in Bitcoin by Colonial Pipeline to hackers. I believe they were able to track the transactions through the blockchain. If there’s a will there’s a way I guess.

Yea…. Lol. Good luck wrapping the constables head around block chain and DIFI that will be standing on the opposite side of the counter of you tomorrow when u go down to the local police station to lay yr fraud charge…

“If you want to break the law you have to be honest”

I am struggling with the numbers. The article says people invested between R1m and R20m. Let’s use an average of R5m. To get to R54b it would mean 11 thousand investors each putting in R5m.

Are there really 11 thousand very rich morons out there? One just needs to look at the bios of the “team” to run a mile

Maybe they did a PowerPoint presentation to the state capture beneficiaries to suggest a way to launder their ill-gotten gains. They promised to take the assets to Dubai so all the looters can be one happy family and join up with the Guptas in Dubai. Facilitating “discreet” money transfers to Dubai can be a successful business model in South Africa don’t you agree?

Maybe this is exactly where the money disappeared to.

I agree with this theory 100%. The money missing via the Guptas is almost exactly the same as is missing in this Crypto “Scam”.

Dude – ‘just look at the bo’s really’?

South African’s like a good scam – if you looked in the dictionary the word gullible, you find the picture of a South African there. You’d think the rich have financial advisors who would pour over such a proposal with a fine comb, but no, they don’t seem to know more than an undeducated guy walking barefoot in the township! They are not secure from their own greed. Losing a million rand, to become a millionaire is not the right approach. Government can’t save people from their own folly, averice and greed. It can’t even keep the lights on for 24 hours! C’mon now.

Remember they could have paid in far less a year ago and the growth in the price of BTC makes it reach R54b.

Good point Marcelle. But even if it was 10% of the value it would still have needed a thousand rich morons

No ways. There cannot be that many idiots with that much money to allocate to this asset class. There must be multi-dip counting going on. Investor X bought, sold, bought, sold, bought, sold

agree 100% Johan. There cannot be so many stupid rich people in the world let alone Mzansi. Agree with kenincapetown … the numbers don’t make sense.

There is an interesting question which should be mana from heaven for an investigative journalist;
If the people who invested large sums in these scams are that stupid how the hell did they come to have the large sums in the first place?

The name “Cajee” should have been a cryptic warning to all investors!

Unfortunately, people who play stupid games win stupid prizes. Although I have a bias in this matter, I do believe keeping your crypto in your own wallet would be inherently more secure than an exchange. For one, a determined group of hackers will always look to hit a larger pot than try to perform the trick and over again to achieve the similar outcome. The same reason why we see serious criminals target CIT.

Oh…you passed matric with 5 distinctions, incl one for Info Tech. Here…take my money!!!

He founded the company when he was 13 – the next elon musk. don’t you know?

Tales from the crypt….

A con artist works on greed. Imagine earning 2% per day..! Some got even more, or were promised more. In this case I believe that these guys were in bed with international crime syndicates/ money launderers, which could explain where the money came from to pay those returns as per a Ponzi scheme. That arms and legs will be broken (at the very least) if these guys are located, I have no doubt.

Intolerance?

”If Woody Allen were a Moslem, he’d be dead by now”

Salman Rushdie (Indian born Author) (1947 -)
I have now reached the point where I am starting to enjoy all these ”martyrs” that don’t want to listen to reason. The more money you lose in these scams, the bigger ”fools” you become in my eyes. You buy these sh*tcoins at your peril!

Crypto money is not honey, my little sonny,
A rich man’s joke is always funny!

please explain how falling for a scam and owning crypto is the same thing? I have been investing in crypto for 5 years. Made some; lost some; overall nicely in the green with an average return of over 50% p.a.

I think you are busy with ”Mok” trading!

Not in the least surprised!! Interest rates are at a record low and people are clamouring to find investments that will give them 20/30/50/100% return. The only problem is that the vultures know that and feed off the greed of the masses. These two found the sweet spot between dumbness and greed and milked it for all its worth!

They never learn, do they? But considering the characters who would be laundering cash though this kind of scheme, it would be wise for the Cajees to watch their backs in confined spaces.

It takes 30 seconds reading the “The Team” insert to know this is a scam!

“Think of how stupid the average person is, and realize half of them are stupider than that.”

― George Carlin

Ciaran, another good report that it seems no one else is reporting and that considering the huge value.

Hey NIGERIA, best you lot up your game, you are being left behind in the Scam Stakes ranking, SA is the new leader, top of the board!!!

Nigeria is quantity…but SA is quality when it comes to scam.

“And in other breaking headlines, Bitcoin rises by 4.5 % overnight”!

Time to put myself out to pasture because I’m not understanding the lunacy of this financial world at all anymore!

Aahhh another theft by the Zuma brotherhood – the Cajees now join the ranks of the Guptas, Sharma, Sheik, Serve, Moti etc…opportunists who manouver their way into the lives of the African political elite and mercilessly use them to their own advantage ( giving them a cut of the action in the process)
South Africa is the land of easy pickings….but we’re coming for you boys….
Tax payers and Ratepayers have been robbed enough – time for payback.
As for the Cajees and their latest endeavor – you can run but you can’t hide!
Funny how the amount stolen is almost exactly the amount that the Guptas have stolen. Interesting that!
This story is only just beginning…and how, may I ask did the Cajees get into the Uk without vaccinations and
going into quarantine….pray tell? They must be in Dubai unless the British government was involved – now that would be a story and a half!

The most plausible suggestions offered about the investors and their source of funds is that at least some of these are state capture beneficiaries and tenderpreneurs using this to launder their ill-gotten gains. Who else would take staggeringly high risks with huge amounts as is reported? People who earned wealth legitimately (and didn’t have it handed to them) are typically not this stupid or greedy. Who would give millions to an “investment manager” of under 25 operating a newly-registered company out of a house? there’s a lot of missing detail here, and I would love to see the names of the “investors” leaked.

“passive, passive-aggressive or aggressive portfolio”… bwahaha I couldn’t read any further!!!!

Looks like the Crypto is catching the boys out?

I regret not joining the game long ago, but it is too late now.

If you are in Crypto, no one cares, you are on your own.

SARS still cares…

SARS will be a big loser here 🙂

Maybe they can help trace the Billions, if they not useless.

There’s yr first mistake – u chose to invest with someone that has a surname “cajee”…

As commented above. Love all the speculation around Crypto. Me thinks they had NO “passion for” Crypto but a lot of passion for good old South African Raaaandds deposited into a good old FNB account. I don’t think a single crypto was bought and even if so was quickly transferred back to boring FIAT currency and used to buy Lambo’s.

Also like the CV of the 20 year old especially the part of starting a business in a small house, very surprised he did not use the Steve Jobs anecdote and say garage of their house in Robertsham.

I suspect the reason nobody said a word is it is all hot money from the political elite and these guys were going to wash it through the crypto lines??

Let them put their claims in then go with a SARS official and audit to see how these people got the money in the first place.

All hot money. Normal people cant be this stupid.

Looking at those BIO’s only one expression comes to mind. “a fool and their money are soon parted”.

the new gupthas make the old gupthas look like amateurs..indians from kzn

Here’s a nice little story;

A 21 year old with the best trading history on record – ever – offers you Mr/Mrs Smarty pants a fat piece of his pie.

Being the diligent investor you are, you never question where they’re from, how they made so much money at such a young age, their trading history or why, indeed, you’re signing with some company in Hong Kong.
Surely you’re just better than Warren Buffet himself & the rest of us suckers don’t know it!

End of comments.

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