Bitcoin has had a huge year, rising all the way up to $64,000 per coin in mid-April. The rise of bitcoin increased the valuation of every other digital coin as well, with some hitting new all-time highs. Bitcoin has been falling steadily since mid-April, with a series of factors impacting the course of this brutal correction. The price has dropped to around $30,000 per coin in the past few days, following several controversial remarks from Elon Musk in May and China’s renewed interest in regulating crypto.
The high volatility of these digital coins is what makes trading cryptocurrency so exciting for some people who stomach the huge capital risks for the prospect of realizing massive profits overnight. It’s what has been driving more and more retail traders, companies, and institutions to the crypto space this year. But high volatility isn’t the only danger to traders. Scammers and hackers looking to steal digital tokens can do real harm, as the nature of crypto coins makes it nearly impossible for authorities to track attackers. South African authorities are currently investigating what might turn out to be the largest scam in the industry. A local firm disappeared with 69,000 bitcoin worth over $3.6 billion, telling investors that hackers accessed and stole the funds.
According to Bloomberg, a pair of brothers who founded the AfriCrypt crypto investment firm vanished along with the missing bitcoin. A law firm in Cape Town couldn’t locate the brothers and reported the matter to the Hawks, an elite unit of the national police force.
AfriCrypt investors received an email in mid-April explaining that the crypto investment company was closing following a massive hack that impacted its electronic accounts and wallets. The older brother, AfriCrypt Chief Operating Officer Ameer Cajee, informed customers, raising the first red flag. He asked customers not to report the hack to authorities, as this would slow down the recovery process.
Some investors contacted a law firm, while others started liquidation proceedings. “We were immediately suspicious as the announcement implored investors not to take legal action,” Hanekom Attorneys told Bloomberg. “AfriCrypt employees lost access to the back-end platforms seven days before the alleged hack.”
The law firm discovered that AfriCrypt’s pooled funds were transferred from the South African accounts and client wallets. The digital coins were “laundered” through large pools of bitcoin to make them untraceable. Decentralized currencies can’t be tracked and traced as easily as regular money. Once stolen, funds might never be recovered.
The brothers stopped taking calls, and the company’s website went down. South Africa’s Finance Sector Conduct Authority is also looking into AfriCrypt, but it’s prohibited from launching formal investigations as crypto assets aren’t legal financial products.
AfriCrypt might become the biggest crypto scam in history when translating the bitcoin amount into dollars. But South African investors have had to deal with a massive scam last year. Mirror Trading International lost about 23,000 coins, worth $1.2 billion, in what was the largest crypto scam of 2020.