Africrypt’s litigation in the South African Court has taken a new turn in which the alleged crypto fraud company’s claimants have agreed and consented to the firm’s revival by casting majority votes in favor of resuscitation. They are willing to accept the offer placed on the settlement table by an anonymous entrepreneur.
There are currently two litigations involving mega crypto fraud schemes which are undergoing litigation in South African Courts. The two crypto firms defending allegations of crypto fraud in South African Courts are Africrypt and MTI. Both the cases, which are pending adjudicating, were brought to trial by the victims/claimants of the two firms. Although both the firms have been alleged to be “fraudsters”, yet each of their cases involves questions of factual controversies.
With regard to the Africrypt litigation, the case is in the middle of the trial. The claimants have been able to convince the Court, hearing Africrypt’s case, that the firm was a crypto fraudster. They were demanding the Court that the assets belonging to the firm should be sold immediately and their money refunded.
However, the claimants are certainly not aware of the international law and practice adopted in such cases. When a Court is convinced that the company’s assets be sold, then the first right on these sale proceeds is that of the company’s creditors. Once the creditors’ claims are settled then the rest of the proceeds are distributed amongst the claimants. In no way, all of the claimants of Africrypt can be regarded as “creditors”. In fact, the creditors are financial institutions and companies which have granted loans to Africrypt. On the contrary, the claimants are in fact “customers” of Africrypt and at best they can be regarded as “victims” but not “creditors”.
This would mean that if Africrypt’s assets are sold then initially the repayments will be made to financial institutions and then to claimants. But unfortunately, Africrypt’s assets are not such which can even settle the entire payments due towards creditors. This would mean that the victims of Africrypt would get nothing if assets are sold.
In the meanwhile, there came an anonymous entrepreneur who placed an offer through which the customers of Africrypt can receive their refunds. The investor offered a US$ 5 Million settlement from which four million will be for customers and one million for resuscitation of the defunct crypto firm. The customers of Africrypt were given the choice of accepting and rejecting the offer of the investor through voting.
It is now confirmed that the customers of Africrypt have gone through the process of voting. As a matter of fact, the majority of them have agreed to and consented that the offer should be taken and the company should be revived. It is now the discretion of the Court whether it wants to accept the offer or not. However, it is very unlikely that the Court will turn down the settlement as well as the offer.