Traders Lose $3.6 Billion to South African Teen Brokers– How to Stay Safe from Crypto Scams
It started with offers to return clients traders’ initial investments by as much as 10% per day and ended with a staggering $3.6 billion in losses for clients. This record amount was stolen by two young South African brothers and may turn out to be one of the largest cryptocurrency scams on record.
It should be stated that the case is still being investigated and the Cajee brothers categorically deny robbing their clients of money. They allege the data breach is real and they were dealing with client funds honestly.
However, the saga of Africrypt follows the pattern of many frauds, such as forex trading scams, that promise impossible returns and then suddenly close down under suspicious circumstances. Crypto scams have increased dramatically since the COVID-19 pandemic and this trend is likely to continue.
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CryptoComplaint experts assist people who have been affected by all types of fraud, including CFD scams, crypto scams, and forex trading scams. Our team has the resources to provide guidance to consumers and get them started on the fund recovery process.
The Rise and Fall of Africrypt
Africrypt was founded in 2019 by two brothers, Raees and Amer Cajee, when they were just 16 and 19 years old. Presumably, their clients had no idea they were just teenagers, since the brothers represented themselves as seasoned brokers with significant expertise in trading cryptocurrencies.
They created a positive impression, presumably, on many clients, because by the time the scandal unraveled in 2021, they managed to steal $5 billion. This makes Africrypt one of the largest cryptocurrency scams regarding sheer amount of losses.
Clients were lured into Africrypt’s services with extravagant promises of 10% return per day. The brothers abruptly closed down services because of an alleged data breach. They released a statement that said the following:
“Unfortunately, this has forced Africrypt to halt operations. We have begun the process of attempting to retrieve stolen funds and compromised information.”
“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.”
There was another message saying that the clients’ money had been processed by the hackers who had used web tumblers and mixers to conceal their tracks and the path of the money. This was to dampen any hope among clients of ever retrieving their funds.
The company also claimed to be working on the case and to be in touch with regulators, legal advisors, law enforcement, and blockchain experts.
After these messages were given to clients, the webpage closed down and there was no further communication.
It is not so surprising when authorities discovered that this data breach was fake, but was an excuse for the brokers to disappear with client funds.
What We Can Learn about Crypto Scams from the Africrypt?
Cryptocomplaint experts understand from analyzing crypto scams and forex trading scams and their victims daily that something can be learned from every incident of fraud. The lessons are not only for fund recovery experts but for consumers with tips on how to spot red flags and stay safe from fraud.
There were many reasons to suspect that Africrypt is a crypto scam, including:
- The impossible promise of 10% daily returns
- The lack of information on who was behind Africrypt
- Shutting down all communication after the alleged data breach
- Urging traders not to seek legal counsel
Since the website has been shut down after the alleged data breach, our team can’t analyze more details, but what the news media has report provided enough information, and those who have seen these crypto scams before can read between the lines.
Any prospective trader should be suspicious of impossible promises of huge returns. Crypto scams and forex trading scams operate on trying to stand out from other brokers. They do this by guaranteeing huge returns.
Those behind the scam don’t bother toning down their language–they are trying to seek clients who are new to trading and do not realize that a 10% daily return is almost impossible, especially for risky assets like cryptocurrencies and forex.
Although a 10% return on investment is reasonable, it is reasonable as an annual return, not a daily return. To avoid being fooled, do some online research and determine what is a reasonable rate of return offered by legitimate brokers.
Also, even legitimate brokers can’t guarantee certain levels of returns on risky assets such as forex, cryptocurrencies or CFDs. These assets are so volatile that it takes some practice and experience to make money from them. The reason scam brokers focus on them is that they can claim to have lost clients’ money in a trade when in fact they simply pocketed it.
The fact that the brokers were teenagers and were able to pull off faking their identity and credentials indicates that traders did not research who was behind Africrypt. Traders should always find the names of the people running a brokerage and look carefully into their history and credentials.
Data breaches happen. However, the way Africrypt handled what they claimed was a breach is not the way a legitimate company should deal with it. When an eCommerce site, for instance, realizes that client accounts have been compromised, they at least establish a helpline or another way of contacting them for updates even if they have to shut down the website temporarily.
The fact that Africrypt shut down all possibility of communicating with them should have revealed what was going on. The icing on the cake was their discouraging clients from seeking legal counsel. That implies that the people who sent the message have reason to be afraid or believe the suspicion will fall on them.
Analyzing the case of Africrypt can help you stay safe and avoid falling victim of similar crypto scams. CryptoComplaint experts analyze these cases daily and guide clients who have questions about crypto services and brokers or who have lost money in a crypto scam.
Have You Been Affected by a scam? Talk to CryptoComplaint Experts
Consult with CryptoComplaint experts immediately if you have lost money to a crypto scam, a forex trading scam or another type of fraud. Our team can provide solutions and advice on how to seek restitution and recover from fraud.