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

Because cryptocurrency is not yet a regulated product.
Image: Bloomberg Creative Photos/Bloomberg

South Africa’s financial regulator says its hands are tied in the alleged $3.6 billion Bitcoin fraud at Africrypt because cryptocurrency is not yet a regulated product there.

While saying the investment platform looks like a 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 that 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. They promised a minimum return of 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.

Calls to the brothers’ cell phones were immediately directed to a voicemail service. The company website is down.

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.

Read: Africrypt ‘hack’ of nearly R54bn dwarfs Mirror Trading

© 2021 Bloomberg

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Weren’t the Bitcoin fanboys waxing lyrical about how it isn’t regulated by government?

And yet here they are asking for regulators to do something?

Oooooooooooooooooooo. Schadenfreude.

Touché! Something like having your cake and eating it?

I’m interested as to whether the brothers will influence the price of Bitcoin in converting their crypto assets into fiat to fund there new lifestyle.
I recall a dip as the recovered MTI coins were sold “at market” to give some sullied investors their cash…
Oh & please leave the regulators alone they weren’t allowed to play in this space. Look forwards to a statement from the newly formed claimants grouping.

Yeah, the moment they do that they will have the authorities breaking down the door…Crypto is not anonymous and the funds are being tracked by the crypto community.

A fool and his money … tulips and ponzi schemes. The crypto bulls will no doubt be out in force later. Me? I’ll sit back with a fine chenin and watch it all crash. Happy with my boring investment strategy in real things

I’m still very sceptical about the alleged size of this scheme.

All we have to go on is the word of a tiny firm of 3rd tier legal generalists that was established in 2019. It seems like they are trying to promote themselves. In the Biznews interview Darren Hanekom alluded to a seemingly massive list of impressive clients in the crypto space.

On what basis is Hanekom attorneys coming up with a figure of $3.6 billion? What is their methodology? What information do they have sight of? How are they inferring which addresses on the blockchain the brothers had control of?

Can anyone remember the Darren Scott saga years ago where he misrepresented his internet radio listenership by a factor of a 100?

I would take a bet with Vegas that the money misappropriated is closer to several 10s of million rand.

My guess, is the alleged size of this scheme relates to massive criminal syndicates washing money into Bitcoin in SA. One just has to look at the mega shipments of cocaine busts recently, cigarette syndicates and/or illegal gold mining etc to understand how we get to these numbers.

SA is a mega hub for mega crime.

The FSCA can’t do anything? Of course they can’t; even in the regulated industry. Just exactly what did they do to protect Steinhoff investors?

End of comments.

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