South African regulator says it's powerless over suspected $3.6 billion bitcoin scam, as crypto is out of its reach

• South Africa's regulator said it's powerless to act on a suspected $3.6 billion bitcoin scam.
• Two brothers who founded Africrypt appear to have gone missing, along with bitcoin worth billions.
• South Africa's FSCA said the company appears to be a Ponzi scheme designed to defraud investors.

South Africa's financial services regulator has said it can't take any action over a suspected scam that lawyers say has caused as much as $3.6 billion worth of bitcoin to go missing.

The country's Financial Sector Conduct Authority said Thursday that Africrypt, the company linked to the lost holdings, looks like a Ponzi scheme set up to defraud investors.

Yet the FSCA said that as cryptocurrencies are not regulated financial products or services in South Africa, it is powerless to do anything in this case.

"At this stage we have only found evidence of crypto asset transactions," it said in a statement. "Currently crypto assets are not regulated in terms of any financial sector law in South Africa and consequently the FSCA is not in a position to take any regulatory action."

Africrypt was created by brothers Ameer and Raees Cajee in 2019, and based in Johannesburg in South Africa.

According to a police statement seen by Bloomberg, the company promised high returns of up to five times principal investments.

Yet Hanekom Attorneys, the lawyers for the affected investors, now say that the brothers - and as much as $3.6 billion of bitcoin - have vanished, in what they describe as a "heist". Insider was unable to contact the crypto company, whose website is down.

The FSCA said: "This entity was offering exceptionally high and unrealistic returns akin to those offered by unlawful investment schemes commonly known as Ponzi's."

"The public is urged to understand that unrealistically high returns suggests that the investment scheme is likely to be fraudulent," it added.

Africrypt's apparent closure, and the inability of regulators to deal with it, raises fresh concerns about the safety of cryptocurrency investments around the world.

Crypto markets are currently largely unregulated. Watchdogs have routinely warned that investors should be prepared to lose all their money.