This week, Bloomberg wrote an article claiming that the co-founders of Africrypt have disappeared, along with Bitcoin worth $3.6B. The company’s COO announced that the exchange was hacked in April, asking that clients not report the loss. Attorneys for a group of clients are not unable to find the exchange operators and have alerted police. The law firm found that the exchange’s funds were transferred into tumblers and mixers, which made the assets nearly untraceable. Currently, the website is down.
“This is nearly $4 billion worth of assets wiped out by bad actors. Such bad acts must be stopped, and exchanges need to operate under a regulatory environment that holds them accountable. There should be an industry standard — a framework that helps operators run their exchanges in compliance with the rules, while deterring bad actors and their chicanery,” explained Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
“We’re still waiting on many governments to act rather than simply stick their heads in the sand and try to pretend that cryptocurrency will go away. It won’t. It is here to stay. However, the bedrock of any exchange is its reputation. For too long, exchanges have been in the news for all the wrong reasons — even the large ones. Traders deserve to know that their assets are secure,” opined Gardner.
According to reports, Hanekom Attorneys stated, “We were immediately suspicious as the announcement implored investors not to take legal action… Africrypt employees lost access to the back-end platforms seven days before the alleged hack.”
“Unfortunately, in South Africa, cryptocurrencies are not legally classified as financial products. What this means is that the country’s Finance Sector Conduct Authority is prohibited from launching a formal investigation. In such a situation, they are best equipped to deal with what’s happening here. But, because the government doesn’t acknowledge crypto, they can’t do their job,” Gardner said.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago. Earlier this year, the company launched its Exchange Trust Score System, which allows exchanges to provide proof that they are operating above board.
“We decided it was time for industry to create an answer after government failed to act. Using our system, Modulus can verify that an exchange is operating in compliance with regulatory requirements and in good faith. That information can be made available to regulators, or even investors — a seal of approval that the exchange is operating according to a certain set of guidelines and that they aren’t fudging their numbers or reports. This helps provide solace that a particular exchange isn’t engaging in nefarious activity — something which is even more important when faced with the prospect of nearly $4 billion in losses,” explained Gardner.
