Cryptocurrency Mining Scam in Kenya Folds, Leaving Investors Financial Losses Unrecoverable
In a recent turn of events, a Kenyan-based "crypto mining" Ponzi scheme known as BTCM has collapsed, leaving thousands of investors in financial distress. After the scheme's request for additional deposits on June 27, the BTCM's social media page has become silent, with no response to the mounting complaints from victims.
According to reports, BTCM promised returns of 188% to 350% on investment after a few days, luring in investors with the promise of lucrative returns. However, a forensic analysis reportedly revealed that BTCM defrauded people of KSh 1.18 billion (approximately $10 million) in just 97 days.
This is not an isolated incident in Kenya. In 2017, a special task force on Ponzi and pyramid schemes established that 271 different schemes existed in the country. A poor economy and lack of information have made Kenyans particularly vulnerable to these schemes.
The Deci scheme, which collapsed in 2006, is another notable example. It gathered over KSh 8 billion (more than $56 million) from 94,000 recorded investors, promising 5% to 10% daily ROI to over 10,000 members. The mastermind of the Deci scheme, George Odinga Donde, died in 2012, with thousands of victims still seeking repayment.
Michael Kimani, the president of the Blockchain Association of Kenya, has stated that a lack of consumer protection framework contributes to the rampancy of such schemes in Kenya. He emphasised the need for clear regulations to protect investors from falling prey to such fraudulent activities.
In an effort to combat this threat, Kenyan authorities are focusing on regulatory oversight and enforcement, public awareness and education, collaboration with international agencies, and implementing Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. These measures align with broader African regional trends where securities commissions and financial intelligence units aim to establish clearer rules, licensing regimes, and monitoring mechanisms for crypto asset activities.
However, it's important to note that some victims have taken to BTCM's social media pages to demand their money, but their complaints have gone unanswered. Additionally, some claim that BTCM has rebranded as ARGO, another pyramid scheme, but ARGO Blockchain, a real crypto mining company based in London, UK, has no apparent ties to the new ARGO company asking Kenyans to part with their money.
As the crypto market continues to grow, it's crucial for investors to stay vigilant and be wary of schemes that promise unusually high and consistent returns. It's always advisable to do thorough research and only invest in reputable and transparent companies.
[1] CoinDesk: Understanding Ponzi Schemes in Cryptocurrency [2] Business Daily Africa: Crypto scams a growing threat in Kenya [3] Investopedia: Anti-Money Laundering (AML) and Know Your Customer (KYC) [4] African Development Bank: African countries move to regulate cryptocurrency
- The collapse of BTCM, a Kenyan crypto mining Ponzi scheme, has highlighted the need for clear regulations in the crypto industry to protect investors and combat financial fraud.
- Much like BTCM, the Deci scheme in 2006 defrauded thousands of investors in Kenya out of millions, underscoring the vulnerability of Kenyans to such schemes in a struggling economy.
- In an attempt to mitigate the issue, Kenyan authorities are focusing on regulatory oversight, public awareness, international collaboration, and strict Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.
- The rampancy of Ponzi schemes in Kenya, such as BTCM and Deci, has been linked to the lack of a consumer protection framework, a problem emphasized by the Blockchain Association of Kenya's president, Michael Kimani.
- Investors should stay vigilant and conduct thorough research before investing in the crypto market, avoiding schemes that promise unusually high and consistent returns, as these may Very well be scams seeking to exploit unsuspecting investors.
