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This year, South Africa was witness to one of the biggest cryptocurrency scandals yet. Brothers Raees and Ameer Cajee, aged 18 and 21, ran a locally based cryptocurrency investment platform called Africrypt. Earlier this year, it was alleged the pair had vanished with over $3.6bn (since proven to be inaccurate) in crypto, including bitcoin. The firm, which reportedly had some of SA’s wealthiest individuals as clients, suffered what the Cajee brothers maintain was a system hack. The security breach saw all the funds stolen, with Raees Cajee and his family disappearing for weeks. The bitcoin brothers broke their silence, saying they had to flee the country after receiving death threats. MyBroadband reported the duo had purchased citizenship on the small island nation of Vanuatu, which provides citizens with visa-free access to over 100 countries, including the UK. Reporter Jan Vermeulen writes that creditor claims against the company were expected to “top out at between R140m ($8.7m) and R500m ($31m)”. The creditors have now negotiated an R80.7m payoff, with an anonymous outside investor who “initially included several conditions, such as that criminal charges against the Cajee brothers be dropped”. Read the original article, South African Bitcoin Brothers’ investors accept R80 million payoff, here. – Jarryd Neves
South African Bitcoin Brothers’ investors accept R80m payoff
By Jan Vermeulen
Creditors of the collapsed Africrypt scheme have negotiated a $5m (R80.7m) payoff with an anonymous outside investor.
Documents MyBroadband has seen indicate that the parties negotiated a successful compromise, accepted by both sides, which must now be made an order of the court.
This is expected to happen at the end of January 2022.
Africrypt was a cryptocurrency investment scheme that collapsed after the co-founders—brothers Ameer and Raees Cajee—informed investors that they had been hacked and their funds lost.
Investors could deposit South African rands or cryptocurrency into the company’s accounts and earn too-good-to-be-true monthly returns.
An investment presentation from around September 2020 claimed that Africrypt achieved returns as high as 13% per month for clients on its “Aggressive” plan.
Africrypt made headlines on claims that the Cajees had fled South Africa with bitcoin to the value of $3.6bn (R58bn).
However, it soon emerged that this figure was woefully inaccurate.
The Bitcoin wallet address the original investigators latched onto as proof that clients had deposited over 69,000 bitcoin into Africrypt also didn’t belong to the scheme.
The address belongs to a legitimate cryptocurrency exchange. It is unclear how investigators linked the address to Africrypt, but investors in the scheme likely sent funds from, or withdrew money to, the exchange in question.
Raees Cajee said in an interview with Wall Street Journal that less than $5m was lost when Africrypt was hacked.
Creditor claims against Africrypt were expected to top out at between R140m ($8.7m) and R500m ($31m).
The $5 million offer from the anonymous benefactor initially included several conditions, such as that criminal charges against the Cajee brothers be dropped.
It also stated that Africrypt must be taken out of provisional liquidation using $1m of the offer as trading capital.
Moneyweb reported that the investor’s proposal suggested they take a 51% stake of the company, with the remaining 49% distributed pro-rata among investors based on what the company owed them.
The Cajee brothers were also to be hired back on at the company.
The investor wants a four-person board of directors appointed — two selected by them, one appointed by the liquidator, and one by the creditors.
A sizeable minority of creditors baulked at the condition that criminal charges be withdrawn against the Cajees.
ITWeb reported that an amended settlement offer removed the condition that creditors drop criminal charges, and introduced certain conditions on the anonymous investor.
MyBroadband has seen a letter to affected investors suggesting that the anonymous benefactor and Africrypt’s creditors have since reached a compromise.
More details on the matter are expected this week.
- All roads lead to Vanuatu as Africrypt Bitcoin brothers get ‘golden passports’
- In hiding: Africrypt’s Cajee brothers say scam overblown – With insights from The Wall Street Journal
- Fall from the top: Bitcoin brothers’ R54bn blunder
- Bitcoin brothers – “we were forced to flee South Africa”
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