South African brothers, Raees and Ameer Cajee, created the Africrypt crypto investment platform in 2019.
But in April, as the price of Bitcoin hit an all-time high, Ameer, the company’s chief operating officer, emailed investors telling them the company had been hacked.
Mr Cajee urged Africrypt customers not to report the issue, saying it would hinder the company’s recovery after the alleged hack.
But investors defied him and contacted the Cape Hanekom law firm, who are crypto experts.
Lawyers for the company have now alerted South African police and crypto exchanges of the problem, according to le New York Post.
Africrypt staff lost access to major platforms seven days before the alleged hack, according to the law firm.
Hanekom said Africrypt’s funds had been moved from its own accounts and those of its clients.
They were then mixed with other Bitcoin transactions to hide what was really going on.
The Cajee brothers have apparently disappeared and their social media profiles appear to have been deleted.
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South Africa’s financial regulator is also investigating, but said its hands are tied as crypto is unregulated in the country.
About 20 investors have obtained an interim liquidation order against the brothers after appearing before a judge in South Africa.
The Cajee brothers have until July 19 to fight the order, according to the ITnews news site.
Last week the Mirror reported how a retired teacher was withneed his savings of £ 120,000 after being the victim of a Bitcoin scam on Instagram.
Teresa Jackson, 63, of Portishead, was left claiming Universal Credit after being made to hand over her cash.
The retiree spotted the bogus Bitcoin investment program – which claimed it had been endorsed by survival expert Bear Grylls – being advertised on social media.
A cryptocurrency has transactional records stored and secured by cryptographic processes, which means that it is virtually impossible to counterfeit.
Bitcoin mining is the process by which new bitcoins are created and put into circulation, carried out by computers solving complex puzzles, which requires huge amounts of energy.
The popularity of Bitcoin has spawned many imitators, and there are now over 4,000 cryptocurrencies.
Some of the bigger ones include Ethereum, Lightcoin, and Tether.
Cryptocurrency is not regulated in the UK, unlike most other financial products.
The Financial Conduct Authority (FCA) watchdog monitors crypto, but only to prevent money laundering or terrorist financing.
This means that if you invest money in anything to do with crypto and lose it, you will probably never see it again.
Many other financial transactions are regulated by the FCA, which means your money is protected for up to £ 85,000 if the business goes bankrupt or your money is stolen in some way.
This is thanks to the Financial Services Compensation Scheme (FSCS), a fund to which financial companies pay.
You can check the FCA or FSCS websites to see if a company you are interested in is regulated and safe to do business with.