back to article Three things that have vanished: $3.6bn in Bitcoin, a crypto investment biz, and the two brothers who ran it

Up to $3.6bn in Bitcoin has disappeared from a South African cryptocurrency investment outfit as well as the two brothers who ran it. Africrypt, led by founder and CEO Raees Cajee and his sibling and COO Ameer, claimed two months ago it had been hacked and had to halt its operations. The biz also urged its investors – said to …

  1. doublelayer Silver badge

    Surprised?

    Whether you trust cryptocurrencies or not, it's usually not a good idea to invest in places where people offer you massive increases and don't show you how it's done. I hope that those who were defrauded can get something back once the thieves are found, but it should also serve as a warning that investment opportunities need diligent investigation before you hand over any money (let alone large chunks of it).

    1. A. Coatsworth

      Re: Surprised?

      >>need diligent investigation before you hand over any money

      People didn't do their investigation with Tulips, didn't do it with South Sea slaves, won't do it now. The world keeps turning.

      Fools are parted from their money and the unscrupulous make a mint... I try to avoid being part of the former, and hope I will never be part of the later, not much else one can do as individual.

      1. HildyJ Silver badge
        Facepalm

        Re: Surprised?

        It's not just cryptocurrency, or bubbles. It's pyramid schemes and snake oil salesmen, Nigerian princes and click through malware, etc. and etc.

        As it's said - there's a sucker born every minute .

        1. DiViDeD Silver badge

          Re: Surprised?

          Well, as they say, Nobody ever went broke because they under estimated public gullibility!

          1. BebopWeBop Silver badge

            Re: Surprised?

            Well, Trump's casinos went bust!

            1. fajensen Silver badge

              Re: Surprised?

              Trump is specially gifted.

              1. Blank Reg Silver badge

                Re: Surprised?

                yes, I've often said that his one skill is failure

              2. Michael Wojcik Silver badge

                Re: Surprised?

                You'll note Trump personally did just fine. While he's not anywhere near as wealthy as he claims, he continues to live the high life while his businesses fail. Essentially that is his business: fleecing investors and creditors.

                He's not particularly skilled at it, either. He's a bully who has some innate skill at duping certain types of people, and he has a pretty decent team of lawyers and accountants, and he has enough political capital to have made prosecutors and regulators somewhat reluctant to go after him in the past. His luck is likely to run out eventually.

        2. gandalfcn Silver badge

          Re: Surprised?

          And people who believe Trump. A pro. scammer

        3. Michael Wojcik Silver badge

          Re: Surprised?

          And there are plenty of cases where people with financial training and expertise fell for obvious scams. There was a case some years back in Michigan where the treasurer of a corporation embezzled a bunch of money and sent it to a 419-style scammer.

          People are bad at evaluating risk and they're bad at making rational economic decisions.

        4. Mike 137 Silver badge

          Re: Surprised?

          Not a new problem. There's an Edgar Wallace story from 1925 about an "investment scheme" that paid around 12% to investors for a couple of years. Then they were invited to meet with the scheme providers and quietly murdered. A Ponzi scheme with extras. This, although bad enough, is not quite in that league.

      2. Anonymous Coward
        Anonymous Coward

        Re: Surprised?

        I'm sure there was extensive due diligence performed, on FB.

      3. werdsmith Silver badge

        Re: Surprised?

        Surely anyone who has made a mint enough to invest big in this, is smart enough to see an offer like this and just dismiss it instantly?

        I guess you can’t account for folk that come by money easily, by inheritance or whatever.

        1. Pete B

          Re: Surprised?

          The alternative is that they've got so much that they regard it as a chump change investment that might pay dividends, but equally might lose completely. Bit like less well off people buying a lottery ticket; reason says you're not going to win, hence just throwing your money away, but the tiny chance keeps people playing.

          1. Anonymous Coward
            Anonymous Coward

            Re: Surprised?

            A Euro-lottery ticket cost about the same as an ice-cream. I get a certain reward from the ice-cream (tastes ok), but it still goes to waist (so to say), so by no means a 100% positive outcome. If I instead buy a lottery ticket there is a small (tiny but not *quite* zero) chance of being able to retire *now*.

            As a minimum outcome I have a very slightly better health, at a maximum I can spend the rest of my life on what I would like (wilderness trips, mostly, even if MSF etc would benefit as well). That is the only case I can see when the lottery ticket is a good way to spend money.

            1. doublelayer Silver badge

              Re: Surprised?

              That only works if you consider the only alternative of buying the ticket as buying the ice cream and if you really value the ice cream at that level. Someone who has other things that money could buy, in whole or in part, or someone who just likes ice cream more than you do, is unlikely to work on that logic.

          2. teknopaul Silver badge

            Re: Surprised?

            The idea that africrypt can gives you better returns on bitcoin than the free market (10% per day) is not believable.

            It's not a moon shot. Its a foot shot.

        2. fajensen Silver badge

          Re: Surprised?

          Stupidity is uniformly distributed in any population, no matter how one slices it.

          Meaning, the percentage of genuinely stupid people in the "high wealth individual"-population will be quite similar to that of the "florida man"-population.

          1. Anonymous IV
            Happy

            Re: Surprised?

            > Stupidity is uniformly distributed in any population, no matter how one slices it.

            Alternatively...

            Think how stupid the average person is, then realise that half of the population are stupider than that.

            1. Michael Wojcik Silver badge

              Re: Surprised?

              You do understand that the "average ... half" canard is only correct if either by average you mean "median", or you have an appropriate distribution, right? And that by repeating it you sound, well, like you haven't given it much thought, shall we say?

              1. doublelayer Silver badge

                Re: Surprised?

                True, but average in typical usage also doesn't necessarily refer to the mean. When not talking about mathematics, average usually represents something that is representative of the middle of the range and the commonly observed value, so I would hazard a guess that most common usages mix median and mode and leave the mean alone. It's really not that strange to expect its usage to correlate more with median.

          2. teknopaul Silver badge
            Trollface

            Re: Surprised?

            Nonsense: statistically there is an extremely heavy weighting of stupid + rich living in Florida. ;)

        3. iron Silver badge

          Re: Surprised?

          Intelligence doesn't come into it. Like the people who were conned by a Nigerian prince the main factor is greed. These people are too busy thinking how much money they will make to realise it is a scam. It serves them right and I have no sympathy.

        4. Michael Wojcik Silver badge

          Re: Surprised?

          Surely anyone who has made a mint enough to invest big in this, is smart enough to see an offer like this and just dismiss it instantly?

          Many people come into money through avenues that require no ability to gauge risk or understand probability or economics.

          Empirically, vast amounts of evidence shows that a great many people with money to invest will invest it poorly.

    2. John Brown (no body) Silver badge

      Re: Surprised?

      And IIRC, this same scenario has already played out with at least one other cryptoexchange.

      But really, who invests 6-7 figure sums in a cryptoexchange run by a 21 year old and a 17 year old?

  2. Anonymous Coward
    Anonymous Coward

    10% interest per day should multiply wealth by a factor of about 1283 trillion (1.283 * 10^16) each year.

    Those guys have probably secretly paid (at a premium) for the extra two seats on the one way Blue Horizon trip later this year and will be living it up on Mars, out of the reach of regulators and anti-trust investigators for the rest of their rich & joyous lives.

    1. Neil Barnes Silver badge

      10% interest per day should multiply wealth by a factor of about 1283 trillion (1.283 * 10^16) each year.

      How on earth did you work that out? Martian arithmetic?

      1. DS999 Silver badge

        With 10% compound interest he's correct - 1.1^365 is 1283 trillion.

        I mean, if you're going to promise 10% daily increases you wouldn't be talking about mere simple interest, who is going to want to invest with someone making such weak promises?

        1. katrinab Silver badge
          Trollface

          Remember to subtract 1 from your answer, not that it makes any difference to your rounded answer here.

      2. katrinab Silver badge
        Paris Hilton

        (1+r)^n - 1

        Where r is the rate of return (0.1)

        and n is the number of periods (365)

        I am always amazed at how few people, even so-called “experts” understand that.

      3. pklausner

        Are you a prince confronted with the wheat and chessboard problem?

      4. Neil Barnes Silver badge
        Facepalm

        Oh the embarrassment.

        I read 1% instead of 10%...

        I die of embarrassment.

        My body, rotting, pollutes a major water source. Disease rages. Millions die.

        Oh the embarrassment.

        1. ITMA
          Devil

          Can I come and plant my Tulips where your body is rotting down please?

          No need to let good fertiliser go to waste....

          1. John Brown (no body) Silver badge

            I suspect his body will be by a river on an island somewhere in the South Seas. Might not be the best place to grow tulips. A bit warm for them I suspect.

        2. Sean o' bhaile na gleann

          ... someone's been reading Joe Haldeman...

          1. Neil Barnes Silver badge

            Someone's been trying to remember where that form of ritual apology came from. Somewhere in a pile of forty year's worth of Analog magazine, I suspect. Thanks for the author!

          2. General Purpose Bronze badge

            Thanks, that was going to nag at me! Found it now, and how appropriate that it's a story about value, currency and barter.

        3. Michael Wojcik Silver badge

          I read 1% instead of 10%...

          Pfft. That wouldn't even give you 37 times your initial investment in a year. Who'd want to put money into that sort of feeble vehicle? I demand an annual yield of at least 4000%.

          (Now I'm hoping I did that right...)

    2. MyffyW Silver badge

      If they can get Bezos hopping-rocket-dong all the way to Mars, best of luck to them.

      (I thought it barely made it above the Kármán line)

  3. Anonymous Coward
    Anonymous Coward

    Who could have ever seen this coming?

    Bwaaahahahahahaaaa

  4. JonHendry

    Clever

    " It’s rumored the brothers have fled to somewhere in the UK."

    Ah, of course. Fled to a place where they will be beyond the reach of law.

    1. I ain't Spartacus Gold badge

      Re: Clever

      They'll need to get to Northern Cyprus, that has no diplomatic status, so no extradition treaties. Or Russia, where they might not extadite you.

      Does Ronnie Biggs' trick still work in Brasil? Get someone pregnant and spend loads of money, so they won't kick the father of a citizen out - until the cash runs out of course.

      However, that's the law sorted. If some of the investors are of a less pleasant persuasion - then hiding from the authorities may be the least of their worries. In which case, a considerable amount of that cash is going to get spent on running. Then again, a billion or three is a considerable amount of money to hide with. It's just that getting it out of Bitcoin and into real, spendable money, is going to leave tracks - and be difficult.

      1. Michael Wojcik Silver badge

        Re: Clever

        It's possible, of course, that some less-pleasant investor has already taken action, and the brothers haven't fled anywhere. That's always a risk when you run a big con, and we're talking (US) billions of USD here.

        I wouldn't try to guess which is the more probable case – that they took the money and legged it, or someone took them out of the picture.

  5. Anonymous Coward
    Anonymous Coward

    Bernie Madoff would have had fun with cryptocurrencies

    1. Pascal Monett Silver badge

      He had his fun with the real stuff.

      And he never actually set foot in jail, the fucker.

      He destroyed the retirement plans of hundreds of thousands of people, and was consigned to house arrest, poor thing.

      I would have had him locked in solitary and flogged daily.

      1. fandom

        He recently died in prision, he had been there since 2009.

      2. MiguelC Silver badge

        Re: never actually set foot in jail ?

        "Bernie Madoff Dies In Federal Prison At 82"

    2. FILE_ID.DIZ Bronze badge
      Flame

      I read an article on Bloomberg where some old traders are loving cryptocurrency because they're able to bust out tricks from 30 years ago that don't work any more in modern commodity markets due to their efficiencies - but exist in crypto exchanges.

      Not sure why your Madoff reference reminded me of this story, other than the fact that big Bernie also pioneered Payment for Order Flow, which is the method by which most brokerage firms today can offer commission-free trades (eg: Robinhood, etcetera)

  6. Anonymous Coward
    Anonymous Coward

    A 'Cryptocurrency Investor' and their money

    are soon parted.

  7. FozzyBear
    Devil

    About the only thing missing from that story was that the investors heard about the investment opportunity from a Nigerian prince

    1. steelpillow Silver badge
      Pint

      There really should be a "You beat me to it" icon.

  8. Little Mouse Silver badge

    How untraceable, exactly?

    "been run through Bitcoin mixers and tumblers [...] exchanges were on the look out for any signs of anyone trading the coins"

    I'm assuming that a mixed & tumbled bitcoin is 100% untraceable, technologically speaking.

    Might the investigators somehow have knowledge regarding the newly mixed coins?

    More likely that they're looking for signs of the perps being greedy or stupid when it comes to cashing in / keeping their mouths shut / not spending silly amounts of money. That's what happens in pretty much every heist movie ever, anyway.

    1. MyffyW Silver badge

      Re: How untraceable, exactly?

      Yep - the Superman 3 paradigm, without the wit of Richard Pryor

    2. gandalfcn Silver badge

      Re: How untraceable, exactly?

      Interesting the number of people who claim bitcoins are easily traceable.

      1. Anonymous Coward
        Anonymous Coward

        Re: How untraceable, exactly?

        Since the ledger is publicly distributed, it should be obvious how a specific crapcoin can be traced. Unless that fundamental premise is a lie.

        Associating it to a specific person or transaction, of course, that can be more difficult.

    3. TheProf Silver badge
      Joke

      when it comes to cashing in

      I always enjoy the shock-horror newspaper reaction to the way thieves spend their ill-gotten gains.

      It's usually along the lines of 'spent the money on expensive cars, a new house, holidays abroad and designer handbags.' Gasp choke!!

      When I rob a bank/footballer/charity/ I spend the money on sherbet-dabs and cheesy wotsits. Nothing to tip off the authorities there. Although I do now need a new warehouse or two to store the rather bulky cheesy wotsits in.

      1. WonkoTheSane
        Trollface

        Re: when it comes to cashing in

        "Although I do now need a new warehouse or two to store the rather bulky cheesy wotsits in."

        Or sell them to other warehouses for use as packing peanuts?

    4. Disgusted Of Tunbridge Wells

      Re: How untraceable, exactly?

      A tumbler takes multiple people's bitcoins, bundles them together, splits them up again ( in differing amounts to the inputs ) and sends them back to the inputters second wallet.

      This used to stop the police from tracing them, but now law enforcement have software to work it all out.

      That's why bitcoin is being phased out of darkweb transactions.

      Also in a tumbler, the only people you're tumbling with are likely to be drug dealers, so if your money came from a tumbler, you're painting a target on yourself as a dodgy character regardless of where your money really came from.

      1. bombastic bob Silver badge
        Devil

        Re: How untraceable, exactly?

        a dodgy character regardless of where your money really came from

        A quicky online search shows that there are a number of Swiss bitcoin exchanges. I expect it would be possible to trade the $2b or so in (de-valued) bitcoin for something a bit more "depositable" in a Swiss bank account, and hide your money the same way that "a dodgy character" would have done it over the last century or so.

        I'm not saying that Swiss authorities could not somehow trace that it was done, or where the perps were when they did it, but once it becomes hard cash and gets deposited in a bank in Switzerland, it may become extremely difficult to trace.

        Similarly for Caiman Islands and other "hide your money" places around the world.

        However, like many have already mentioned, crooks make mistakes and that's how they get caught.

        Any global bounty hunters out there looking for a reward to catch them? I'm sure the investors wouldn't mind forking over a percentage to get the rest of their money back.

        1. John Brown (no body) Silver badge

          Re: How untraceable, exactly?

          "However, like many have already mentioned, crooks make mistakes and that's how they get caught."

          ...and these crooks are aged 17 and 21. They think they are indestructible but they've not been alive long enough to have gained much, if any, wisdom. I suspect they'll be found sooner rather than later.

    5. fajensen Silver badge
      Pint

      Re: How untraceable, exactly?

      I'm assuming that a mixed & tumbled bitcoin is 100% untraceable, technologically speaking.

      It is safer to assume that someone like the NSA or Chinese Intelligence can easily "unwind" those permanent, unalterable, transaction records, sitting right on the Internet, using only a fraction of their ressources. The "untraceability" of Bitcoin lies, IMO, in the fact that the TLA's mostly doesn't care*.

      However, 4 Billion is a big incentive. Some people one definitively does not want to meet up with can probably also do it!?

      *) I think some TLA designed bitcoin in order to get a "mapping" of criminals, their money flows, and their contacts / conduits to the "normal world", and then use some of them for whatever TLA's need people for.

      The old pictures of a "bit of tart on the side" doesn't work, being gay is nothing, and so on, so a new recruitment method was neeeded. Bitcoin is the prototype.

      1. Michael Wojcik Silver badge

        Re: How untraceable, exactly?

        It is safer to assume that someone like the NSA or Chinese Intelligence can easily "unwind" those permanent, unalterable, transaction records, sitting right on the Internet, using only a fraction of their ressources

        I have no idea what this might actually mean, but if you do, I'd like to hear an actual argument for it. And by "an actual argument" I don't mean "the NSA is magic".

        There are many flaws in Bitcoin and in every other cryptocurrency I've looked at. But handwaving arguments about them do no one any good.

      2. MyffyW Silver badge

        Re: How untraceable, exactly?

        @fajensen as a conspiracy theory your proposition is most entertaining in that it fits with the scant facts. I like the speculative fiction possibilities this opens up.

    6. Lee D Silver badge

      Re: How untraceable, exactly?

      Not $2bn worth of untraceable, that's for sure.

      For a tiny percentage of that, you could employ the resources needed to trace those transactions privately, I'm damn sure the governments can do it if they are interested enough.

    7. Michael Wojcik Silver badge

      Re: How untraceable, exactly?

      I'm assuming that a mixed & tumbled bitcoin is 100% untraceable, technologically speaking.

      Might the investigators somehow have knowledge regarding the newly mixed coins?

      The Cambridge Computer Crime Center (or whatever they're called – the group Ross Anderson used to run before he went to Edinburgh) had significant success tracing Bitcoin flows through laundering processes using FIFO heuristics. They had a paper on it a few years back.

    8. doublelayer Silver badge

      Re: How untraceable, exactly?

      "I'm assuming that a mixed & tumbled bitcoin is 100% untraceable, technologically speaking."

      And you assume wrong. It's not untraceable, just harder. A lot easier in fact than tracing laundered cash.

      Here's how it works:

      Wallet A (known used by fraudster): Transfers 12345 coins to wallet B.

      Wallet B (probably still the fraudster): Transfers 593 to wallet C, 268 to wallet D, 926 to wallet E, ...

      Wallet C: Frequently receives payments from wallets and sends out others, but never the same amounts. Received 593 from wallet B, also sent 183 to wallet K, 83 to wallet L, 26 to wallet M, 103 to wallet N, ...

      Probably, some or all of wallets K, L, M, and N are controlled by the fraudster. Unfortunately, you don't know that for certain so you have to track them all until you see an exchange.

      That's it. You can watch the movements of Bitcoin and trace who did what. You just have to break the pseudonymity of the wallets. Likely all clients of wallet C are criminals anyway, so you don't have to worry too much about the other people you will be tracking.

      1. Mark 65

        Re: How untraceable, exactly?

        Wouldn't your method be to tumble the coins then convert to Monero or some other less traceable form?

        1. doublelayer Silver badge

          Re: How untraceable, exactly?

          That can help, but you will lose more in exchange fees and, assuming you eventually want to get cash, Bitcoin is easier to cash out than Monero is. Even then, you can figure out that they've done that. It's not perfect, but that doesn't make the "technically untraceable" statement correct.

        2. fajensen Silver badge
          Pint

          Re: How untraceable, exactly?

          The pro way is the legal way - run it through a couple of LLP's.

          Someone lobbied to have the "Limited Liability Partnership", a specific company structure where one does not have to publicly establish the controlling interest. A letterstuck behind the drawers of some lawyer acting on behalf of the LLP is good enough.

          I would assume the people lobbying for and crafting this legislation knew what they were doing and why, much better than the coin-bro's.

  9. Anonymous Coward
    Anonymous Coward

    keep quiet and not alert police as doing so would apparently derail the process

    otherwise known as 'cashing in' :)))

  10. Anonymous Coward
    Anonymous Coward

    Company compliance officer

    "The company's compliance officer reportedly said he didn't know for sure what had happened nor where the brothers were."

    If he doesn't suspect what happened, then he's really lacking imagination. We all know what happened.

    1. Eclectic Man Silver badge

      Re: Company compliance officer

      AC: "If he doesn't suspect what happened, then he's really lacking imagination."

      Maybe that is why he was hired.

    2. Stoneshop Silver badge
      Headmaster

      Re: Company compliance officer

      Their recruitment ad: "Come, pliant officer".

      Which was fulfilled, evidently.

    3. xeroks

      Re: Company compliance officer

      To be fair, a tech company run by a 17 and 21 year old with billions of other people's money is exactly the target organised crime would go for.

      And with those rewards, they might not be too squeamish about how they did it. Computer hacking isn't the only way of doing this stuff: good old-fashioned finger hacking would do the trick too.

      1. Michael Wojcik Silver badge

        Re: Company compliance officer

        Exactly. And even the "We got hacked" story isn't implausible. It's not hard to believe a couple of kids running a scam would have poor IT security and OPSEC. Then they could have scampered to escape the wrath of their investors, or been done in by them.

        It's clear this "investment" was a sham. It's not clear how the house of cards came down; there are just too many plausible scenarios.

        1. TDog

          Re: Company compliance officer

          It's also not hard to believe that their personal security would be woefully (for a very short time) inadequate. A quick kidnapping; gentle persuasion and instant disposal would produce viable candidates for the disappearance of both themselves and the bitcoins giving more time for the perps to permanently poke off.

          It's a lot of money - so it's a lot of incentive.

        2. Mark 65

          Re: Company compliance officer

          They're clearly in hiding waiting to spend their ill-gotten gains. It's just that they've chosen to hide burnt and dismembered at the bottom of the ocean.

  11. spider from mars

    Yay money laundering!

    sooner or later some financial authority somewhere is going to decide that AML regulations apply to cryptocurrency transactions, and a whole lot of people are suddenly going to become very sad

    1. Disgusted Of Tunbridge Wells

      Re: Yay money laundering!

      Most exchanges, etc, already enforce KYC regardless of the regulations.

      1. Throatwarbler Mangrove Silver badge
        Paris Hilton

        Re: Yay money laundering!

        "Most exchanges, etc, already enforce KYC regardless of the regulations."

        [Citation needed] And, in any case, it doesn't matter if "most" do it. All these gents need are a few that don't.

        1. Disgusted Of Tunbridge Wells

          Re: Yay money laundering!

          The same could be said for Liberian bank accounts.

          But Coinbase, Kraken, Binance, etc, all do KNC.

    2. Lee D Silver badge

      Re: Yay money laundering!

      It's already difficult to move money from your bank into or out of any of the major Bitcoin etc. exchanges.

      They're not stupid, they know what's coming.

      When I withdrew the last dregs of my Bitcoin, I had to do so by sending it to a third-party website who sent me an Amazon voucher... well dodgy! But it worked out.

      Trying to withdraw to my full-validated, only UK bank account as a UK citizen, the transactions were just automatically refused. And I remember years ago when I was trying to buy them and credit card / debit card were refused at the bank end, not the other end.

      My original Bitcoins were obtained by a third-party escrow site where you give the site £50 and then someone later sends you some Bitcoin and you confirm the transaction, then they release the money. Because the people selling Bitcoins have to use dodgy third-party means and were jumping onto anything like PingIt or any new service as soon as they launched to get there before they caught onto how they were using it.

      I'm not sure how people are trading in cryptocurrencies for cash, to be honest, at least in the UK. It's quite a tricky thing to do, and far from anonymous. It's entirely reliant on taking a risk on unknown, and pretty untraceable, third-parties, companies registered in the Cayman Islands, etc.

      If you want to trade in crypto, do it via an investment vehicle of some kind. You still make the money, but they take all the risk. Well, most of the risk. There's still a risk that one day what they're doing will collapse because of some new money-laundering rule, but at least you stand a chance of getting some of your money back. I wouldn't invest in Bitcoin etc. directly in this day and age.

      1. katrinab Silver badge
        Thumb Down

        Re: Yay money laundering!

        "If you want to trade in crypto, do it via an investment vehicle of some kind."

        You mean like the kind of investment vehicle discussed in the article?

        If you do that, you lose whatever perceived benefits crypto might have.

        1. fajensen Silver badge

          Re: Yay money laundering!

          If you do that, you lose whatever perceived benefits crypto might have.

          Crypto *has no benefits*, other than buying illegal stuff online and getting put in a database over it.

          The only reason to "invest" in crypto is to match the hype and meet Volatility targets for ones portfolio.

          SAXO Bank (of course) offers CFD's (Contracts for Difference) wich strips away all of the crypto bullshit hassle and leaves pure Volatility, that stuff that one actually wanted to have. Totally legit and easy to do.

      2. Loyal Commenter Silver badge

        Re: Yay money laundering!

        I'm not sure how people are trading in cryptocurrencies for cash, to be honest, at least in the UK.

        Find vendor who accepts payment via BitPay. Transfer cryptocurrency to BitPay. Pay vendor. Receive goods. BitPay also convert various crypto into vouchers for Amazon, major supermarkets, etc. I've not tried that route, but can confirm that it works with vendors who accept BitPay (e.g. Pimoroni)

        1. Disgusted Of Tunbridge Wells

          Re: Yay money laundering!

          Or: Use the largest trading platform in the world ( Binance ) and do a faster payment bank transfer....

  12. Martin Silver badge
    FAIL

    Sometimes, I just can't believe the gullibility of some people.

    I've got some money to invest.

    I'm approached by a company called Africrypt, run by a 21 year old kid and his seventeen year old brother, who promise me up to 10% PER DAY returns, because cryptocurrency.

    Why wouldn't I invest with them? Sounds pretty good to me.

    Talk about a fool and his money...

    1. Androgynous Cupboard Silver badge

      Re: Sometimes, I just can't believe the gullibility of some people.

      True, but you've got to hand it to them. On face value, this is one of, if not the largest theft in history, and it was done by two kids. Over a billion each! Laundering it is going to be a problem, sure, but even if they have to lose 50% doing so it makes them the two of the most successful criminals in history.

      1. Red Ted Silver badge

        Re: Sometimes, I just can't believe the gullibility of some people.

        Even if you have to lose 99% through the laundry, that still leaves you with $10 million.

        More than I'd need for a very comfortable retirement.

        1. Stoneshop Silver badge
          Trollface

          Re: Sometimes, I just can't believe the gullibility of some people.

          Even if you have to lose 99% through the laundry, that still leaves you with $10 million.

          "The easiest way to become a millionaire? Well, just start out with a billion."

          By the way, if you lose 99% in the laundering I would go and see if there's some still stuck in the drain sieve. Must be a couple of million easily.

          1. WonkoTheSane

            Re: Sometimes, I just can't believe the gullibility of some people.

            "The easiest way to become a millionaire? Well, just start out with a billion."

            The Trump family can confirm.

            1. bombastic bob Silver badge
              Thumb Down

              Re: Sometimes, I just can't believe the gullibility of some people.

              *facepalm*

        2. katrinab Silver badge
          Unhappy

          Re: Sometimes, I just can't believe the gullibility of some people.

          Honestly, $10m isn't that much if you have to survive for the rest of your life on it, especially if you are still a teenager.

          While it is certainly far more than most teenagers have, realistically, you are still going to have to work for a living, but the $10m could help with that, a lot.

          1. Pascal Monett Silver badge

            $10 million

            Do the math.

            If you allocate yourself a budget of $5000 a month, one million lasts you 20 years - and that's without interest.

            You tell me how you're going to lead a normal life and spend $5K per month. Obviously, you can forget owning a Ferrari, a yacht, having your entrance to the Lion's Club, or anything else fancy and socialite. Well, you don't have that now, do you ? Why would you need that simply because your bank account is stuffed to the gills ? Does that change you in any way ? No. It does not.

            95% of lottery winners end up riddled with debt, because they confuse having money with having changed social status. If you have never had an interest in sailing, winning $10 million at a lottery does not justify your buying a yacht.

            The only thing money is good for is to remove your problems. If you have money and you have problems, you don't understand what money is for.

            Money is not for creating more problems. If you have more money than you can spend, you're fine. Stop trying to find excuses to spend more money.

            1. Loyal Commenter Silver badge

              Re: $10 million

              Money is not for creating more problems. If you have more money than you can spend, you're fine. Stop trying to find excuses to spend more money.

              From the perspective of societal good, this is the exact problem with capitalism.

              If you have vast sums of money, and hold onto it, it means that money is taken out of the economy and the supply is reduced. There's slightly less to go around for everyone else, and less taxation to fund public services. This harms everyone.

              If, however, you spaff it all on yachts, that money goes back into the economy. The agent takes his cut, pays taxes on it, and spends it to pay for food and bills. The yacht builders pay their employees, pay income taxes and national insurance contributions, buy other goods and services, and so on. The money continues to circulate in the economy. The government gets their cut, so there is money for rubbish collections, road maintenance, pandemic vaccination programmes, armed forces, and so on.

              Once you get people hoarding personal wealth on a scale similar to a country's GDP, you have a problem.

              Of course, there's nothing wrong with saving for a rainy day, saving up to buy a house, etc. but you have to ask how many zeroes on the end of those savings are necessary to insulate yourself against the unforeseen and how many are just down to pure avarice at everyone else's expense.

              1. fandom

                Re: $10 million

                "If you have vast sums of money, and hold onto it, it means that money is taken out of the economy"

                If you keep it in a coffer at home, maybe.

                If you keep it at a bank, nope, the bank will loan it to their customers.

                Actually, they can loan about 50 times as much, it varies depending on the country.

                1. Loyal Commenter Silver badge

                  Re: $10 million

                  Yes, but if you go to the bank and say, "I'd like a loan to buy a super-yacht," or even, "I'd like a loan to pay my rent / pay employees / buy food," they first thing they'll ask is how you intend to pay it back, before laughing you out of the room. Yes, our economy is based in large part on the circulation of debt, but a lot of people will see that as a problem, not a great selling point. Just take a look at every major financial crash in recent history for a lesson in why.

                  1. fandom

                    Re: $10 million

                    Yes, they laugh at people for asking for a loan, that's why nobody is in debt

                    1. Disgusted Of Tunbridge Wells
                      Pint

                      Re: $10 million

                      An upvote isn't enough. Have a pint* on me.

                      * technically a small image of a pint

                    2. Loyal Commenter Silver badge

                      Re: $10 million

                      That system works, because banks make loans that they think people will be able to afford to repay, or at least pay the interest on.

                      Large loans are typically "secured", for example, if you have a mortgage, it is secured on your house. If you default, the bank gets the house, as well as any repayments you've already made.

                      Now, arguably, a bank might secure a loan on a yacht with the yacht itself, but they'll probably look at the rate of depreciation on that yacht, which, unlike property, is unlikely to go up in value, and do the maths, and work out that if you defaulted after your first payment, and they repossessed it, they'd probably only get 40% of the value back. If they were in the business of giving loans for yachts, and there were enough customers out there, they might amortise that risk by charging a high rate of interest to cover the defaults, on the assumption of a certain rate of defaults, but they'd probably decide that the risks were too variable, and go into a safer business. So yes, if you walked into a bank and asked for an unsecured loan on an expensive veblen good like a yacht, or a "luxury" watch, they would either laugh at you or try to fleece you for an interest rate that rivals a pay-day loan company.

                      1. fandom

                        Re: $10 million

                        All that techobabble to end up saying that banks ask for collateral when granting a loan?

                        Wow! Who would have thought? Thanks for that earth shattering insight.

                  2. Disgusted Of Tunbridge Wells
                    Paris Hilton

                    Re: $10 million

                    Have you ever thought that if you are so inexperienced as to the world ( ie: you don't know that banks want to give loans to people ) then why are you so sure of your opinions on it?

                    It is pretty worrying that opportunistic political parties want to give the vote to 16 year olds.

                    1. Loyal Commenter Silver badge

                      Re: $10 million

                      Banks want to give loans to people who can afford to pay them back, plus interest.

                      If you can't pay, they won't give the loan. That's what "credit ratings" are for - a way of establishing whether a person is likely to repay a loan or not.

                      Banks actually want to give out loans that people can only just afford, so they can get the maximum profit in interest payments, without the payee defaulting. Once someone defaults, they have to either write the debt off, sell it to a debt collection agency, or try to get it back via the civil courts. After a certain time, it gets statutory barred, and if the person who took out the loan has managed to evade the bailiffs and debt collectors, they walk away.

            2. gotes

              Re: $10 million

              Wait, so - Mo' money, less problems? Well I never.

            3. Michael Wojcik Silver badge

              Re: $10 million

              $5K per month doesn't go far in most of the US. My household net income is ... considerably ... above that, and while we're wealthy compared to most of humanity or even most households in the state, we still have to budget.

              And, no, we don't have any yachts.

              $10M would be a nice nest egg. In the US, you'd still need a job, or be married to someone who has one, if only for the medical insurance. And in many parts of the US you'd likely want more income than just the interest off that investment.

              Of course this is all in response to an implausible hypothetical. Assuming the BTC in question haven't been lost, and that they're gradually cashed out, I expect the holders can net considerably more than $20M.

            4. midcapwarrior

              Re: $10 million

              You could buy an annuity that would easily generate twice that amount per month. There are stable REITs that would provide triple that return monthly.

              Maybe you don't live like a king but you can certainly make enough to never work again.

              Maybe not London or New York but plenty of places in the world.

              1. katrinab Silver badge
                Meh

                Re: $10 million

                Over 60+ years? I doubt it.

                Also, you have to consider inflation over that time period. Over the past 60 years, that has knocked around 90% off the purchasing power of the dollar.

            5. Martin Silver badge

              Re: $10 million

              95% of lottery winners end up riddled with debt

              This sort of statistic is trotted out over and over. There is no evidence for this whatsoever. Not everyone is Viv Nicholson.

              Last time something like this was mentioned, I did a bit of research. In 2017, something like 82% of the UK lottery winners were better off or the same as they were before they won. That means 18% were worse off. Not exactly 95% riddled with debt.

      2. Julz Silver badge

        Re: Sometimes, I just can't believe the gullibility of some people.

        North Korea might help...

      3. Loyal Commenter Silver badge
        Holmes

        Re: Sometimes, I just can't believe the gullibility of some people.

        ...but even if they have to lose 50% doing so it makes them the two of the most successful criminals in history.

        I think you'll find, that once such sums are involved, these people are no longer considered to be criminals.

        What, you think all those multi-millionaires and billionaires out there are squeaky clean and got their money by being super hard-working and good at their jobs? Hahahaha.

  13. Andy The Hat Silver badge

    Surely this story shows the futility of crypto? Despite being peddled as incredibly secure system and the best currency since ... err ... currency ... there are so many of these very large scams reported that the inherent security of such systems must be in question ... yet isn't questioned by the political masters. The supposedly untraceable nature of transactions makes it all the worse (even if a Nigerian prince moves in to 37 Coleridge Close, Climthorpe, nice semi with one garage and 5 Lambourghinis, who's to say that should be regarded as crypto-suspicious as it may simply be the result of a normal email scam campaign.)

    If a banking system had this many large intrusions it would be almost instantly shut down (eg Bearings) yet cryptos keep on starting up and running and failing ... Who has their fingers deep enough in this pie to stop the authorities stamping on this all over the world? China are the only financial power to take action (but that may arguably be for the wrong reasons).

    1. Anonymous Coward
      Anonymous Coward

      Re: Surely this story shows the futility of crypto?

      Not really.

      Here in South Bananistan there were already several scams like that -- small companies no one ever heard about promised 30% interest per month on crypto money. Lots of simple folks fell for that -- some selling cars, borrowing fiat money, emptying their savings to invest. Then, oh no! according to the financial experts in those companies something happened with the algorithmic trading cosine deframbulation module, and the money was locked, but they will return it as soon as possible, trust us. Then the financial experts sort of disappeared.

      There were some stories on the news, some interviews with a poor ol' grandma who gave her retirement fund to her unemployed grandson, and at the time lots of alerts on the lines of "don't fall for this".

      Some months later, more reports from the same scam with a different company name. More reports on gullible people who wanted to get rich quickly ("but they told me that theirs was different!"). This time some of the people who fell for the scam were advised by some church leaders (the same ones that ask for money to ensure eternal salvation).

      Stupid people will always want to get rich quickly, and they don't care for any opinion that is outside of their Facebook and/or Church bubbles. So there will always be opportunities for scammers. Crypto is a very good medium for that -- most people don't know what it is, but it is worth millions.

      For related fun: https://en.wikipedia.org/wiki/Telexfree

    2. Loyal Commenter Silver badge

      That's not why Barings got shut down. It collapsed because they essentially allowed a single trader to make a bunch of long-shot bets with more money than they had to back them with. No "intrusions", as such, and it wasn't "shut down" by any authorities, it folded due to insolvency.

      This particular story sounds like a run-of-the-mill "get rich quick" scam. They sued the word "crypto" in there, but there's nothing to indicate that this was the nature of the scam, except that when the perps ran off with the cash, it was in the form of Bitcoin, rather than a suitcase full of high-denomination notes, or bearer bonds, or frozen orange juice futures, or whatever.

      Bitcoin itself might turn out to be a massive investment bubble, but this fraud isn't related to that.

      To compare to another famous bubble, this is like a couple of guys telling everyone that they could get rich, if they only give them money to buy a load of tulips, buying a load of tulips with that money, and then rather than waiting to see if the price goes up, just running off with them, selling them, and keeping all the money. Hell, there might not even be any tulips involved, or only just enough to string the "investors" along by waving a bag of bulbs in their faces to encourage them to part with more money, and get their friends in on the act.

  14. elsergiovolador Silver badge

    It's new but all the same

    Do you think when traditional banking was starting these kind of things were not happening?

    The new sector is just making itself comfortable.

    1. Tim Worstal

      Re: It's new but all the same

      As I observed in an article in this very place.

      Crypto is giving us a front seat for every monetary scam, fraud and mistake humans have come up with over the past couple of millennia being repeated at warp speed.

  15. Howard Sway

    Doubt they'll enjoy themselves

    They will probably live in a state of constant fear, worrying that the slightest mistake will expose who they are - and knowing that a lot of very pissed off people will be very interested in having them tracked down, with permanent disappearance the likely result. Would you trust your 17 year old brother not to do something stupid and get noticed because he suddenly had unlimited wealth? At their age they will not have thought this plan through very well, and they're probably already at the "shit, what do we do now" stage.

    1. Anonymous Coward
      Anonymous Coward

      Re: Doubt they'll enjoy themselves

      I wonder what lifestyle these days could be discretely maintained with a mystery source of money?

      Set up a Patreon to finance my travel blog and then siphon in some money from my ill-gotten gains each month (and naturally be a good person and pay my taxes)? Or is that all easy to trace credit cards? Move somewhere where prostitution is legal and claim that I make a living as the worlds least attractive male prostitute (cash transaction, pay my taxes)? There Must Be A Way[TM]

      If I could manufacture the 100% water-tight evidence I could claim to have bought a few $100 worth of bitcoin in 2010 or so and forgot about them until recently. But that is a big if if someone goes digging.

      1. Anonymous Coward
        Anonymous Coward

        Re: Doubt they'll enjoy themselves

        Kebab shop. One of those shops where the food is completely inedible, the opening hours are weird for a "post pub nosh" type place, nobody ever seems to go there in the first place, the staff is always rude and annoyed with customers, etc. Buying the cheapest ingredients possible and just dump it out end of the night every night, yet make massive cash profits. You know, exactly the way many drug dealers are now laundering their ill gotten gains.

        1. Tom 7 Silver badge

          Re: Doubt they'll enjoy themselves

          In many towns in the UK there are Christian Book Shops where no-one enters or leaves. We had one in the last town I lived in and you could see it from the pub garden and in three months no-one won the free pint for spotting someone going in that I put up. I decided they must be money laundering shops.

        2. Stork Silver badge

          Re: Doubt they'll enjoy themselves

          Nail salons?

      2. bombastic bob Silver badge
        Pirate

        Re: Doubt they'll enjoy themselves

        If you do not mind living in a 3rd world country where paying off politicians keeps you out of trouble, $1b each would probably go a VERY long way. Buy your own compound, or your own island, hire locals as guards in a paramilitary kind of way, private airstrip and aircraft, ship things in from all over the world, and so on.

        Several nations in the equatorial and south pacific region come to mind, as do many Latin American countries. Even Cuba. And since they're from Africa, perhaps a few places on THAT continent wouldn't mind having them, either.

        1. yetanotheraoc

          Re: Doubt they'll enjoy themselves

          J.M. would recommend Belize, if he were still with us.

      3. fajensen Silver badge
        Pint

        Re: Doubt they'll enjoy themselves

        Look at whatever the rich are doing for inspiration and find the packaged solution that best matches your desired new lifestyle :)

  16. Eclectic Man Silver badge
    Meh

    BCCI

    As in the now defunct Bank of Credit and Commerce International, was a bank that took around $4 Billion, was 'managed' from overseas and suddenly went bankrupt with huge debts (i.e. lots of creditors). I believe that the money and the miscreants were never found. I suspect that it was set up as a scam in the first place, although of course I cannot prove it, and should anyone who managed it come forward and disprove that theory I will humbly apologise.

    (I should also state that I had a BCCI credit card, and owed about £156.00 on it at the time of the collapse. I did offer to pay up, but that was declined, and there being no actual way to pay, actually came out a slightly embarrassed winner.)

    I must say that I'd be somewhat wary of a company where the COO is 17 years old, but then I suppose I shouldn't be ageist.

    1. Tom 7 Silver badge

      Re: BCCI

      I had some cash in a small credit and loan organisation that went bust and I received my money from the government bank compensation scheme. Then two years later the company was re-booted and my account re-filled. I'm waiting to see how long it is before someone notices or its a really really really rainy day,

      1. Loyal Commenter Silver badge

        Re: BCCI

        I think legally you have to tell them, or you are technically committing fraud.

        I think the standard form, for when a financial institution makes a mistake in your favour, is to write them a letter, either sent by recorded post, or asking for a confirmation of receipt, telling them that they have made a mistake. No need to tell them it's in your favour, and if they don't respond, the money is legally yours.

        IANAL so don't take this as bona fide legal advice!

    2. Jaybus

      Re: BCCI

      I suspect in both cases the criminals who were laundering money, errr I mean principle investors, there were fleeced by the criminals who were doing the laundering. If they were/are ever found, we still will not hear from them ever again.

  17. R.O.
    Happy

    Ha ! Ha! Now there's something to brighten the day.

    Stupid, greedy rich people swindled out of $BEEL-YONS$!

    Sweet.

  18. Ace2

    Ha ha

    Every time a cryptofool uses “fiat currency” as a pejorative on here, it makes me giggle. Totally unregulated, instantly transferrable anywhere in the world? It sounds great for MY purposes, but you have to consider that the rest of humanity’s flotsam is also similarly attracted to it, and they’ve got very different standards than you and me.

    1. Loyal Commenter Silver badge

      Re: Ha ha

      The lack of regulation does make cryptocurrencies very much a "Wild West" situation, and you do have to assume every other player is a bad actor, unless proven otherwise.

      However, whenever I see a comment like this, I feel compelled to ask how that is different to, for instance, the US Dollar, the favoured currency of black-market arms and drugs dealers worldwide?

  19. JohnG

    Bitcoin mixers and tumblers

    Would any of the funds entering a Bitcoin mixer and tumbler setup be legit? I could see some law enforcement agency descending on such an operation, inviting them to show where some specific Bitcoins had gone or be charged with involvement in the crime(s) concerned. A court might well decide that all the funds in such an operation are entirely the fruits of criminal enterprise and therefore, subject to seizure.

    1. Loyal Commenter Silver badge

      Re: Bitcoin mixers and tumblers

      And when that "mixer and tumbler" is operating in one of the other 194 countries in the world, how do you propose that your law enforcement agency does that?

    2. Martin M

      It happens, some people actually run mixers out of jurisdictions with regulators that are interested.

      https://www.coindesk.com/eu-authorities-crack-down-on-bitcoin-transaction-mixer

      https://www.zdnet.com/article/ohio-man-arrested-for-running-bitcoin-mixing-service-that-laundered-300-million/

    3. doublelayer Silver badge

      Re: Bitcoin mixers and tumblers

      While using a mixer is not in itself illegal, there is basically no reason to do so other than hiding criminal revenues. A legal action is likely to succeed if they can actually do it. Unfortunately, it's not easy to do it because it doesn't require much to operate a mixer--it can be done by software and does not require any physical interaction. It's therefore possible to operate it in a country which doesn't investigate such crimes or to simply hide where the computers doing the work really are.

  20. Pascal Monett Silver badge

    "ten per cent daily returns"

    That in itself is a huge warning sign.

    Ten percent interest is somthing millionnaires can probably get - monthly.

    A 21-year old promising that on a daily basis ? If you believe that I have a bridge to sell you.

    Rich people lost money. No tears here.

    1. Tom 7 Silver badge

      Re: "ten per cent daily returns"

      10% is only available to TV advertising pay day loans companies with very large cashiers.

  21. Bitsminer Bronze badge

    Not 21 and 17 but 18 and 14!

    This dodgy crypto-coin was originated 3 years ago (2019) by a couple of teenagers, according to the article.

    The victims, (formerly rich) folks, invested in a lemon-aid stand selling magic coins not a beverage.

    I gotta say though, those two children must have big cojones. Assuming they are still alive.

  22. Henry Wertz 1 Gold badge

    Yup should have been suspicious

    Yup they should have been suspicious being promised 10% daily returns (as first poster and many have said.)

    Cryptocurrencies are highly volatile, higher volatility means high and fast potential gains, but also faster potential losses (and the potential to make 0 if the money is sitting but not being actively traded.) Indeed if these people were promised any particular level of profit they should have run straight away.

    Also, you'd hope some of these people would do due diligence to realize they do not have to take their money to some magic startup to roll the dice on cryptocurrency, there are forex traders who got bored with the relative stability of currency trading and have applied their techniques to crypto trading. If you want to invest in crypto without watching over it yourself, you do not have to take your money to some magic crypto startup, there are conventional investors who are happy to professionally* invest your money in crypto.

    *Crypto in general, due to the high volatility, is really above the risk levels professionals typically take. But they will apply their hard-earned professional techniques and experience they use to eek out profits from some 1% price difference in forex, to try to make and hold profits in crypto, so they're likely to be better at it than a lot of randos who just go on and trade some currencies around.

POST COMMENT House rules

Not a member of The Register? Create a new account here.

  • Enter your comment

  • Add an icon

Anonymous cowards cannot choose their icon

Biting the hand that feeds IT © 1998–2021