by | Aug 1, 2021

I have written on Crypto assets before, and I covered a few scandals that unfolded. One of the major issues with crypto assets is its ability to be anonymous, for the lack of a better phrase. These assets can flow between online “wallets” that obscure the trail and make it a lot harder to track than conventional assets. Often when Crypto currency is stolen or is paid over for fraudulent or criminal activities, it’s very hard to track and open a conventional criminal case against the person/persons on the other end.

The most recent theft occurred with Africrypt, where 43 billion Rand seems to have been removed from the local business and transferred out of the country. The owners of the business have come forward but are not in the country. The owners of the business claim their business and the various accounts were hacked and the currency was taken. The two owners fled the country after the hack, due to having threats made against them.

I saw an article on Money Web which I will quote here to explain how these cases are handled in getting back crypto assets.

A chap by the name of Hamilton Cheong, “a South African-born forensic sleuth now based in the US, who has spent the last few weeks assisting law enforcement agencies around the world to unpack what happened with the Africrypt billions”.

Blockchain track-and-trace

“Cheong’s company, Crypto Investigation Bureau (CIB), helps governments and organisations secure their digital assets against modern-day threats coming from ransomware and organised crime.

It has developed a blockchain track-and-trace programme called God’s View to hunt down missing digital assets, and it was this programme that was used to piece together the movement of funds into and out of Africrypt wallets.

The blockchain is a detailed and immutable ledger of all bitcoin transactions and is open to public scrutiny. The problem is linking bitcoin addresses with real-world people and organisations, though that is becoming easier through the use of software tools like God’s View, which made it possible to track every bitcoin moving into and out of Africrypt-controlled wallets”.

‘Hack’ story

“Cheong says the evidence does not support the story of a hack originating out of Ukraine, as claimed by the owner, in an affidavit before the Gauteng High Court seeking to stop the final liquidation of Africrypt.

Under the owner’s version of events, on April 13 hackers from Ukraine smashed through several layers of security to make off with more than R50 billion in crypto assets”.

According to Cheong, “If this is true, the hackers would have broken through several security layers in a matter of minutes to get to the crypto, and that is extremely unlikely. We don’t think this was a hack. One reason we say this is that four months before the alleged hack, funds were being depleted out of wallets under the control of Africrypt.”

 Millions or billions lost?

Cheong says that the lawyer representing affected parties “claim of R43 billion is closer to the truth, and hints that the actual figure could be higher – much higher – once all the wallets used by Africrypt are totalled together.

By painstakingly piecing together the web of transactions into and out of wallets used by Africrypt, Cheong hints that some of these wallets are used by operators known for ransomware attacks on business and by ‘dark web’ operatives”.

“Cheong dedicated hundreds of hours of his own and his team’s time to unravelling the Africrypt web because he had the resources and tools to do it. He also has a deep sense of patriotism.

Africa is home, he says, but SA is earning a reputation internationally as a haven for dodgy crypto ventures”.

When the Africrypt story is finally told, Cheong’s name will feature strongly in the credits.

In closing:

It’s not for me to run down crypto currency. Many businesses operate successfully with this model and some countries are adopting this as more of a mainstream form of exchange. This will change the way business is done in the future and more structure is helpful.

What we should be aware of, as with all dealings that involve assets, is the safety and recourse that you have if something goes wrong. Right now, with crypto assets, it’s difficult to recover from situations like this due to the nature of the landscape. We always consider risks when considering investable assets. This should be no different to crypto assets. Cases like this can teach us about how these situations are handled. It’s a brave new world, and education is key.

If you want to read the full article, please head over to MoneyWeb, the author is Ciaran Ryan.