Bitcoin trader brothers 'who fled South Africa with $3.6billion in stolen cryptocurrency had bought citizenship to the Pacific Island of Vanuatu months earlier'
Ameer and Raees Cajee, the founders of a South African cryptocurrency exchange, disappeared earlier this year after telling investors their company had been hacked.
Africrypt - one of the country's largest cryptocurrency exchanges - in April informed investors of the hack but asked that they not report it to police, saying that would slow the process of recovering their missing funds. The alleged hack came as Bitcoin's value surged to record highs.
Now it has emerged that Raees paid £95,000 for citizenship of Vanuatu in October 2020, with Ameer doing the same in January, according to documents seen by The Guardian.
Raees and Ameer, who investors' lawyers had been unable to reach for months, now claim they are victims of organised crime.
Speaking to The Wall Street Journal from an unknown location, Raees said he and Ameer were forced to flee South Africa after receiving 'death threats' from what he described as 'organised crime syndicates'.
He strongly denied any allegations of wrongdoing. Raees also claimed that Africypt never had $3.6billion (£2.5billion), telling the paper that the missing amount was no more than £3.6million.
The figure was initially reported by Bloomberg, which said that 69,000 coins had disappeared and estimated their worth based on the peak value of Bitcoin in April when the money went missing.
The brothers also promised to cooperate in any future enquiries and said they were preparing a dossier that would prove Africrypt had been hacked and that they had been stolen from.
Some investors retained law firm Hanekom Attorneys to investigate the incident and it discovered that Africrypt's pooled funds had been withdrawn from the local accounts and client wallets, where the coins were originally kept, then put through tumblers and mixers - a.k.a. other large pools of Bitcoin - a process that severely complicates any attempt at tracing the money.
'Africrypt employees lost access to the back-end platforms seven days before the alleged hack,' Hanekom Attorneys told Bloomberg.
The incident was reported to Hawks, an elite national police force that tackles organised crime, economic crime, corruption, and other serious crime.
Police found that the brothers shed some considerable assets in the weeks before their disappearance, selling off their Lamborghini Huracan, a luxury suite at one of South Africa's most expensive hotels and a rented beachside apartment in Durban.
Lawyers also alerted crypto exchanges worldwide to be on the lookout for attempts to convert the coins.
South Africa's Finance Sector Conduct Authority is looking into Africrypt, but cannot launch an official probe into the incident because cryptocurrency is not considered a legal financial product in the country, Bloomberg reported citing the watchdog's head of enforcement Brandon Topham.
However, Gerhard Botha, a Johannesburg lawyer representing 58 investors, was able to obtain a provisional liquidation order against the fugitives to investigate.
If the money is not recovered, the incident would be the largest-ever cryptocurrency loss in history.
The Guardian reported that since January 2020, 2,000 people have purchased citizenship of Vanuatu, a remote Pacific island with a population of just 300,000.
The government's citizenship-by-investment (CBI) scheme allows anyone to apply for a passport by paying £95,000.
Successful applicants gain not only citizenship of the island, but also visa-free travel throughout the UK and EU.
CBI schemes are legal and relatively common in small countries including Malta and Grenada, though some larger countries such as Austria and Turkey also have such programmes in place.
According to an analysis by Investment Migration Insider, the CBI scheme earned Vanuatu £72million - 42 per cent of all government revenue in 2020.
Among those to have purchased citizenship in Vanuatu, according to The Guardian investigation, are former Indian politician Vinay Mishra, who is accused of corruption, disgraced Syrian politician Alaa Ibrahhim, and former UN-backed Libyan Prime Minister Fayez al-Sarraj.
In response to the investigation, Vanuatu's Financial Intelligence Unit (FIU) pledged to undertake stringent checks on those named in the report.
Director Floyd Mera told the newspaper that those with 'substantial convictions' could have their citizenships revoked.
'Going forward, the FIU will conduct enhanced checks... If any of these persons have criminal convictions, FIU will promptly inform the Citizenship Office of the updated information,' he said.