Last year South Africa achieved yet another dubious record when the Mirror Trading implosion was regarded as the biggest crypto currency scam ever.
On 23 June Moneyweb reports: Africrypt ‘hack’ of nearly R54bn dwarfs Mirror Trading
“While hundreds of thousands of investors were scrambling to find out what happened to funds they had invested in failed crypto scam Mirror Trading International (MTI), a far bigger crypto disappearing act was playing out without hardly anyone paying attention.”
“Africrypt, which reportedly counts several high profile South Africans and celebrities among its investors, was hacked on or about April 13.”
“A staggering $3.6 billion (roughly R54 billion) was swiped out of multiple wallets controlled by directors of the company in a matter of hours.”
“This was different to MTI in one crucial respect,” says Darren Hanekom of Hanekom Attorneys. “In the case of MTI, clients were required to purchase bitcoin on a local exchange and ship it to an MTI bitcoin wallet.
“In the case of Africrypt, they were required to deposit funds into an FNB account which would then be used to purchase bitcoin, often on Luno. That bitcoin would then be broken up and mixed with other transactions to disguise the source.”
The following day, the FSCA issued a media statement on the matter saying that it was continuing to investigate complaints for indications of whether or not a financial product or service was offered to the public, which would have required Africrypt to be registered with the Authority. At this stage it has only found evidence of crypto asset transactions which are not regulated in terms of any financial sector law in South Africa and consequently the FSCA is not in a position to take any regulatory action.
It was intended that the introduction of Twin Peaks would bolster the Authority’s powers in regulating more products. One of the driving forces behind this was the RVAF of Herman Pretorius which, after an initial investigation, was found not to fall under Regulator’s jurisdiction.
An article titled Officially on the Road to Crypto-Asset Regulation published by Webber Wentzel sketches the current position and explains the function of the Crypto Asset Policy: “The core purpose of the impending crypto asset regulatory framework is not to regulate the nature of crypto assets or dictate the development of the underlying technology, but to subject the providers of crypto asset-related services to regulatory supervision and oversight. The transition of the South African crypto asset industry to the impending regulatory framework will be driven by two important questions: (i) who is a crypto-asset service provider (“CASP“); and how will CASPs be supervised?”
Business Maverick reports that a Bloomberg report states that international banking regulators have decided to classify Bitcoin as the riskiest of assets. This has dragged cryptocurrencies further into the mainstream financial world. It also made it extremely costly for banks to hold digital tokens on their balance sheets, potentially delaying crypto’s wider adoption.
It is interesting to note that crypto scammers are targeting the wealthy. Unlike some of the other get-rich-soon schemes which went for the poorer section of the community, the crypto currency schemers go for the big bucks.