If he had not bumped into an online story about a Bitcoin scam in June, Kenyan teacher Joseph Muthomi would now be among citizens who have tried investing in cryptocurrencies.
The story recounted how an unknown number of Kenyans had lost millions of shillings in a Bitcoin Ponzi scheme.
Muthomi had been keen to invest some 100,000 shillings (923 U.S. dollars) savings into cryptocurrency, a form of investment that has in the past months taken Kenya’s tech-savvy youth by storm.
“I changed my mind after reading about the scam and others in Africa, particularly the one in South Africa where investors lost 4 billion dollars,” he said recently.
To date, Muthomi has not made any attempt to invest in Bitcoin and he does not think he would do it soon. The secondary school teacher is among tens of Kenyan tech-savvy youths who have slowed down in investing in cryptocurrencies due to growing fraud. The rapid fluctuation of the value of bitcoin and other cryptocurrencies has further dented interest in digital assets.
“The rise in fraud in cryptocurrencies in particular Bitcoin is a major setback to investors, especially in Kenya, where interest was growing and some people were even trading using the currency,” said Joseph Macharia, founder of online marketplace Mkulima Young, based in Kenya.
Macharia said investors are mainly losing their money in online outfits calling themselves Bitcoin investment schemes. “These are run by people and they have control of them. They wake up one day and close them after collecting millions and one cannot trace them,” he said.
While across the world some corporates and government institutions have invested in cryptocurrencies, in Kenya, institutions have kept off.
Julius Kipngetich, the chief executive of Jubilee Holdings, said on Thursday in a digital forum that cryptocurrencies are hot air, a kind of Ponzi scheme that leaves many investors in tears. He discouraged people from investing in them.
Bernard Mwaso of Edell IT Solutions, a software development start-up in Nairobi, said the lack of clear regulation of cryptocurrencies in Kenya, has made things worse for investors. “The Central Bank has warned people in the past about investing in Bitcoins but while it has lately softened its stance, it does not help that there are no mechanisms in securing investors’ funds or investment in cryptocurrencies,” he said. Enditem