One such individual is Ms Esther Muthoni, a Kenyan businesswoman who is now desperate, sick and confused after investing millions in a Brazilian pyramid scheme dealing with Bitcoins.
Among other promises Ms Muthoni was told by Velox 10 Global, a little-known company that claims to trade in bitcoins founded by Brazilian con Ricardo Rocha, and swallowed hook line and sinker is that those who would be ranked among its biggest investors by April 18, 2018, would win a free five-day trip to the United Arab Emirates, where they would meet “top global business gurus”.
And with that Ms Muthoni pumped Sh3.2 million ($320, 000) in the scheme. She didn’t stop there and also introduced her friend Lucy Kamatu, who invested Sh550,000 ($5500) into the scheme. Now all their hard-earned money is gone without a trace.
Ms Muthoni is however, not alone in this latest ‘bitcoin’ pyramid scheme that has since left many Kenyans hopeless, bitter and confused, she is among the thousands of Kenyans who fell for the fraud.
On September 20, 2017, Velox 10 Global entered the Kenyan market with a bang and held a colorful launch at Hotel Intercontinental in Nairobi.
Mr Rocha accompanied by the local Velox representative, Mr Paul Mugo graced the event, according to Media reports of the launch.
The firm promised ‘heavens’ and lured thousands of Kenyans into the world of cryptocurrency by claiming it would help investors mint millions of shillings in profits.
It charged $100 (about Sh10,000) as membership fee, but members needed to upgrade by paying an additional $200, with the promise of earning up to $4,000 daily. For the likes of Ms Muthoni the deal was too good to let go despite the then Central Bank of Kenya Governor Njuguna Ndung'u warning against investing in the cryptocurrency.
“I knew I would recover the money in months,” Ms Muthoni told the Nation.
Glad that there was now a way she could engage in a stress-free investment to secure her future, Ms Muthoni was one of the hundreds of Kenyans who attended the launch, where they were taught how to wire money to the bank account of Velox agent Daniel Karobia Gichuki.
They were promised up to 50 per cent profits on their investments, a typical line used by pyramid schemes that seems never to get out of fashion.
Ms Muthoni and the others were also promised more money if they introduced more people to the idea.
And so, on November 13 and 17, 2017, Ms Muthoni being none the wiser wired Sh3.2 million to Mr Gichuki’s Equity Bank account.
Mr Gichuki was fully aware that the bank would want to know why she was transferring more than Sh1 million as required by law so he came up with a way to beat the system.
He told her to indicate that the money was “payment for work done” in the transfer forms.
Six months later, with no money coming in as promised and Mr Gichuki refusing to return her money, a desperate Ms Muthoni reported the matter to Central Police Station.
She also said Mr Gichuki had even threatened to harm her and her daughter. Mr Gichuki was arrested and arraigned for fraud the Milimani chief magistrate’s court. The case is ongoing.
Mr Gichuki insists that Ms Muthoni and others who invested in Velox were adults who knew what they were doing.
"The fact that my account was used for the transactions is no reason to blame me," he told the court.
The two website names the company was associated have since disappeared and are no longer accessible.
Velox10.com is up for sale, under auction by an IT firm called BGroup.
The second one, veloxglobal.com, reads: “This webpage is parked for free” meaning the website was a dummy page and likely never existed.
Similarly, at the time Velox began its operations in Kenya, it had not yet been registered as a company in the country. It was only registered on January 25, 2018, nearly four years after its operations began.
Velox, however, is not the only vehicle fraudsters have used to take gullible Kenyans for a ride.
A source at Central Police Station in Nairobi told the Nation that complaints had been raised against another digital currency company.
“Most of those accused opt to settle the cases out of court,” the source said.
In January last year, a group of seven filed a case at the High Court seeking to stop Velox from operating in Kenya.
The group also wanted CBK, Capital Markets Authority and the Directorate of Criminal Investigations ordered to take action against Velox and its founder.
“CBK and the CMA have failed in their licensing and regulatory duties by allowing Velox to continue its illegal activities within Kenya. They ought to be compelled to take legal action against the company,” they told the court.
Shortly before the seven filed the case, police officers arrested Mr Rocha after an investors meeting at the Hotel Intercontinental. He was however, released shortly after.
The Kenyan elite quick response force, Flying Squad even wrote to the court requesting for the filed documents, which it wanted to use in an extortion investigation.
On Friday, Flying Squad deputy head Jackson Owino told the Nation that investigations into the scheme are ongoing.
