An unknown investor is prepared to spend $5 million to acquire 51% of the stake in the bankrupt South African crypto investment company Africrypt, on the condition that criminal proceedings against its founders, the Kajee brothers, are dropped. This was reported by Moneyweb.
According to the report, creditors will vote on the proposal on 12 November.
In April 2021, Africrypt abruptly halted operations, citing a hack. Amir and Reis Kajee disappeared, as did the firm’s clients’ funds.
Brothers were charged with fraud. Media reported the amount of losses at $3.6 billion, but investors noted that losses were much lower.
Kajee denied the charges, saying they are in hiding because of threats of physical violence. According to them, irrecoverable losses amounted to $5 million.
The brothers still insist the attack on the company was a cyber breach, but investigators are not convinced, the publication notes. In May 2019, a similar breach hit another one of their firms.
The compromise proposal presented to Africrypt’s creditors provides for a $4 million payout to settle their claims. It is thought they amount to about $13.1 million.
Another $1 million would be injected by the investor as working capital to keep the business going. For the $5 million investment, the investor would receive a 51% stake in the company. The remainder would be divided among creditors in proportion to the amounts of their claims.
The investor offers not only to drop all criminal charges against the brothers, but also to reappoint them as company leaders. Another condition is the inclusion on the board of one of the liquidators, Eugene Januari, alongside the investor’s own representative.
One creditor, who asked to remain anonymous, told the publication the offer was “absurd.”
“This is a ticket out of prison for the Kajee brothers. Who would invest in a business like this, as if they have a credit of trust or a chance of success, besides someone close to the Kajee family?”
However, another interested Moneyweb source believes creditors will accept the offer since the alternative is getting nothing.
The initiative must secure 75% support, after which it will be brought to court.
In April, South African regulators announced tighter controls over the cryptocurrency industry.
In November, the South African government decided to ban direct or indirect investment in digital assets by pension funds.