After all, there could be some Christmas cheer for Africrypt investors, who voted last Friday to accept a R77 million ($ 4 million) offer from a mystery investor who proposed to take 51% of the company and, apparently, keep it alive. The remaining 49% of the shares will be distributed pro rata among creditors.
The same investor proposes to put another approximately R15.2 million into the company to keep it running and to take possession of the intellectual property supposedly created by the two Cajee brothers who founded Africrypt: Raees and Ameer.
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“There seems to be a belief among some that there is some useful intellectual property in the company, and the idea is that the company will acquire it as part of the engagement,” says Ruann Kruger, legal representative of the Africrypt liquidators.
A condition of the compromise that did not reach some of the creditors is that the criminal proceedings against the Cajees and the “affiliated entities” be withdrawn. This is likely to be illegal, and is called “aggravation” in the law, which is agreeing not to prosecute a crime in exchange for a reward. This does not completely eliminate the threat of criminal charges against the Cajees, although it is unlikely to come from creditors.
The final decision to prosecute or not rests with the South African National Prosecutor’s Office.
Another concession that creditors seek is representation on the board of directors: they want a total of four directors to be appointed, two for the investor, one for the liquidator and one for the creditors.
The engagement includes an agreement to hire the two Cajee brothers.
“It’s not the worst deal one could hope for,” said one investor, who asked not to be named. “We get maybe 40c or 50c back in the rand, and the company can be reactivated in such a way that the other funds recover over time.”
Cut into slices?
Africrypt fell into a fireball earlier this year after suffering an alleged attack, when an amount of approximately 200 million rand was reported to have been stolen. This was not the first time that the Cajees’ clients had been attacked. It happened in early May 2019, when an unknown amount of crypto was allegedly hacked.
Creditors are still not convinced that this is a genuine stunt, and some want to question the Cajees about it to determine whether it was genuine or not.
Ironically, if they had held onto crypto rather than invested in Africrypt, their investments would be worth hundreds of millions of rands today.
Bitcoin is up about 200% over the last year and Ethereum around 1000%.
Creditor Claims Deadline
Kruger says it remains uncertain as to the exact amount of funds lost in the Africrypt hack.
“We ask creditors to submit their claims before 4:00 pm on Friday, November 19. Any claim received after this date runs the risk of being rejected. Claims should be for the amount deposited only, not for the current value of any crypto deposited at the time. ”