FSCA Is Planning To Declare Crypto Assets A Financial Product

The Finance Services Conduct Authority (FSCA) is considering declaring crypto assets a financial product. Following the latest scam, Africrypt, investors lost a whopping R54 billion; this new decision will give FSCA authority over these transactions.

The Africrypt Scam

AfriCrypt, a South African cryptocurrency investment firm, reportedly duped investors out of $3.6 billion. They claimed that their trading system got “hacked” and approximately stole 69 000 bitcoins. Due to no regulations surrounding cryptocurrency in South Africa, this fraud broke loose.

Ameer Cajee and his brother Raees Cajee, the founders of Africrypt, allegedly transferred the fund from a South African account before escaping to the United Kingdom.

The Investigation

FSCA announced yesterday that an investigation is underway on whether a financial product or service offered to the public. This required Africrypt to register with the authority. It only found evidence of crypto asset transactions, which do not come under any regulation according to South African financial sector law.

The FSCA stated that their first findings of Africrypt led them to conclude that, regardless of the measures they put in place, this business was providing extraordinarily high and unrealistic returns comparable to those offered by illicit investment schemes popularly known as Ponzis.

FSCA’s Warns the Public

FSCA asked the public to understand that unreasonably high returns indicate that the investment program is most likely a scam. Furthermore, they urged the people not to invest without consulting legally regulated financial service providers. They sell goods from legitimately certified financial institutions.

Parallels Drawn To The Mirror Trading Crypto Scam

The Africrypt fraud is similar to the Mirror Trading International cryptocurrency scam in Stellenbosch and lost around R9 billion in investor cash and industry analysts regard it as the giant scam internationally 2020.