4 days ago, news broke out in Nigeria that a politician was arrested in connection with a N607 million (approx $760,000) hack on Patricia, a cryptocurrency startup. Patricia's story is a long tale that involves the betrayal of trust, lack of corporate transparency and terrible mismanagement of client funds. Egging a user base to swap their cryptocurrencies for an illiquid token created due to negligence, is a sure-fire way to flush a business down the drain. The recent developments point to a deeper plot, given the politician in question was a governorship candidate in the 2023 gubernatorial elections held in the nation early this year. A can of worms is being opened up for us locals as we dive deeper into the world of political corruption and the necrotic Fintech industry. A story for another time but it got me thinking about the other instances of fraud that occurred across the continent. We know all about Mt. Gox and FTX because they were well documented and for good reasons, but what about home, how well do you know about the multi-billion dollar Ponzi scheme pulled off by the Cajee brothers? I'll take you down memory lane as we revisit a story of bitcoins, deception, suspicion and disappearance.

The cryptocurrency industry began to gain traction back in 2019 and that's the same year Ameer and Raees Cajee launched their cryptocurrency exchange, AfriCrypt, an exchange they claimed "utilizes artificial intelligence to operate its trading platform". How they sold this lie to investors beats me, the closest thing to AI technology that year was Siri, the iOS assistant. Nonetheless, the urge to make a quick profit, greed and the dreams sold by this dubious duo were enough reasons for customers to part ways with their money in the hope of better financial reward. Digital attacks happen all the time, especially in the crypto industry. Binance has suffered hacks on multiple occasions, with the 2019 hack costing them north of $40 million. The difference between the hacks is TRANSPARENCY, CZ was completely honest about the hack and the implications, while the Caajee brothers took another, less favourable route.

In 2021, 2 years after the launch of the then multi-billion dollar AfriCrypt, the brothers reported that the exchange was hacked and the hackers carted away 69,000 BTC. This was an unprecedented event unfolding in South Africa, yet it only surfaced when the brothers had vanished because, as absurd as the amount stolen sounds, the request made by the brothers to their investors was even more absurd, as a matter of fact, I commend their audacity. Losing 1 BTC to a hack warrants the attention of the police, talk less of $3 billion+ BTC lost to a hack. Asking their investors not to call the police should have been the first red flag and sign that the police ought to be involved. The reason for such a request should have automatically triggered investors into involving the authorities, with Ameer citing "jeopardy to their recovery efforts" if the police were involved. Investors did as they asked and waited for the co-founders to settle the ship, but little did they know that they had bought the Cajee brothers enough time to make their getaway.

The description of events given by the brothers had discrepancies. These discrepancies served as the death knell for AfriCrypt as investors engaged law enforcement and legal advisors to track the brothers who were then in hiding and to find their missing funds.

In the next months, the missing cryptocurrencies were traced to wallets controlled by the brothers, who claimed to The Wall Street Journal that AfriCrypt only controlled $200 million at its peak and only $5 million went missing. Africrypt was put in provisional liquidation in April 2021, and a South African court granted the liquidators authority to find the missing investor cash and sell the company’s assets the following month.

Protecting Your Assets

I have no pity for the "investors" who lost their money to these frauds. In George Samuel Clason's book "The Richest Man in Babylon", he gave certain principles I dubbed "The Laws of Gold" with 3 of them playing out in this scandal.

1. Gold clings to the protection of the cautious owner who invests it under the advice of men wise in its handling.

2. Gold slips away from the man who invests it in businesses or purposes with which he is not familiar nor approved by those skilled in its keep.

3. Gold flees the man who would force it to impossible earnings or who follows the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.

Number 3 sticks out like a sore thumb because it accurately describes what happened. The Cajee brothers were tricksters, in fact, they were very good tricksters given their age, with one of them being a teenager when this occurred. The amount of greed one must have to forsake due diligence, wisdom from professional investment bankers, and heed to the dreams sold by "kids' is a dangerous amount that can lead to the loss of one's entire estate.

Never listen to anyone who promises you unrealistic returns on your investment. Remember, if it's too good to be true, then it is exactly that. There are no miracles in the investment of money, no matter the vehicle used.

Never invest money with people who do not have a track record or a body of work to show their skill and expertise in the field of finance. Apply this every time you seek to place cryptocurrencies into an investment vehicle. Know the risks associated with it and seek advice always.

A little caution is better than much regret, stay safe!

Till next time.