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Crypto Wrap: From China crackdown to bitcoin heist, a look at all the action in cryptocurrency space this week

In what can be considered as the biggest bitcoin scam to date, South African brothers Raees and Ameer Cajee, who ran Africrypt, a cryptocurrency investment firm, vanished with more than $3.6 billion worth of bitcoin.

June 27, 2021 / 07:53 PM IST
Bitcoin (Image: Reuters)

Bitcoin (Image: Reuters)

From China cracking down on cryptocurrency mining to the South African Cajee brothers pulling off the biggest bitcoin heist to date, here’s a quick update on all that happened in the crypto world this week. 

In what can be considered as the biggest bitcoin scam to date, South African brothers Raees and Ameer Cajee, who ran Africrypt, a cryptocurrency investment firm, vanished with more than $3.6 billion worth of bitcoin. This figure is worth more than the cumulative losses that the crypto space incurred employing frauds and crimes in 2020, which stood at $1.9 billion, as per CipherTrace. 

Two months ago, the brothers informed their clientele of a potential hack worth $3.6 billion, imploring the investors not to resort to legal relief, since that would delay the recovery process of these funds. Many investors, suspecting the advice, went against the same, only to find their investments vanishing. The FSCA (Financial Sector Conduct Authority), which oversees financial regulations in South Africa said that even though they are working to regulate this space, they currently have no jurisdiction over cryptocurrency regulation. 

Crackdown on crypto mining 

Speaking of regulations, China is taking its crackdown on crypto mining seriously. After issuing crypto mining bans in prominent regions like Sichuan and Xinjiang, the PBOC (People’s Bank of China) called for a prompt check and disablement of client accounts engaging in cryptocurrency transactions. Alipay, one of the largest payment platforms in the world, also conceded to the move. 

Notably, China, which is responsible for more than 70 percent of global cryptocurrency mining, is considering launching its own digital yuan, amidst concerns of cryptocurrency facilitating money laundering and illegal transfer of assets. 

Following the announcement, Bitmain Technologies, the world’s largest mining rig seller, has ceded operations.  Prices of rigs, which refer to the computer infrastructure that goes into mining cryptocurrency, have tanked by over 75 percent since then. As per reports, the mining machine is currently selling at 700 yuans, significantly down from its price of 4,000 yuans in April 2021. 

Experts predict that around 90 percent of the country’s mining operations will go offline post this enforcement, with companies looking for alternatives in countries like the United States, Canada, Kazakhstan, and more. 

The announcement led to reds all over the cryptocurrency world, with bitcoin and ethereum tumbling to record lows. Currently trading at $32,000, bitcoin registered a fall of more than 3 percent weekly. Similarly, Ethereum tumbled more than 12 percent in the last seven days, trading currently at $1,800. 

On the other hand, El Salvador, having legalised bitcoin, has announced that the country will give $30 to each citizen in starter accounts to promote the use of cryptocurrency. Allotting almost $120 million for almost 4 million starter accounts, President Nayib Bukele clarified that the law, which will be effective post-September, will make the use of bitcoin optional. 

Elon Musk draws flak

For all the bitcoin enthusiasts, Hong Kong-based FTX exchange will soon allow its investors to trade in more than 55 US-based tokenised stocks like Google, Facebook, Tesla, and more. The underlying combined value of these stocks, which stands at more than $100 million, has been launched by Digital Assets AG. Bitcoin maximalists also took a jibe at Elon Musk, who criticised their intellect in a tweet. Notorious for wildly swaying the cryptocurrency market with his tweets, many prominent crypto proponents like MicroStrategy’s Micheal Saylor, tweeted in support of the alternative currency. 
Ira Puranik
first published: Jun 27, 2021 07:46 pm