In our series of letters to African journalists, Kenyan broadcaster Wahiga Mwoura writes about cryptocurrency scams, in which investors have been traded in his name to flee.
I got a call from a doctor I didn’t know, asking if I had interviewed a Kenyan billionaire about a new bitcoin product on some nondescript website.
I sighed with concern as I knew he had fallen victim to a two-year-old online scam alleged to have been with a local billionaire, I backed a cryptocurrency trading platform.
Despite my best efforts to warn Kenyans about the scam through my social media platforms, it seems that the thugs continued to change web addresses and strategies to target vulnerable Kenyans, who would hopefully I wake up that the day will give better news.
What is a mix of high appetite for risk – and frustration – many Ponzi schemes fall for that initially seem like an answer to prayer.
US citizen arrested
The latest scam to be exposed in Kenya was around an app called Amazon Web Worker Africa, which claims to be an affiliate of Amazon Inc. and is accessible via mobile and web applications.
It had nothing to do with the global retail giant.
A few weeks ago, investors in Amazon Web Worker woke up to learn that the app had been removed from the Google Play Store without official communication and that their investment, running into the thousands of dollars for some, was no longer accessible.
The offer was simple – get paid to refer others in the app and also pay to save your money on the app. You were promised some percentage return as your original investment remained safe.
As the app disappeared, hundreds of Kenyans flooded various social media platforms to express their concerns, with some lamenting that close friends and family had introduced them to an “investment opportunity”.
The good news was that Kenyan authorities announced the arrest of a 50-year-old American in what was allegedly known as the “Amazon Web Worker Scam”.
Police said he was suspected of being part of a syndicate and would be charged with money laundering and cyber fraud.
His arrest – which happened after taking off at the main airport in the capital Nairobi – has given some investors hope that their money will be returned.
Investment scams have now become common in Kenya and may have something to do with the unemployment rate.
Pre-pandemic data from Kenya’s National Bureau of Statistics shows that 40% of Kenyan youth lacked jobs in February 2020 and, with the pandemic in its third wave, the employment situation is even worse now , although the latest data has not been released yet.
Scams come in all shapes and sizes – from lucrative land deals, lifetime farming investments, off-plan housing bonuses, online forex trading schemes and even, oddly enough, cryptocurrency mining schemes.
The cryptocurrency trading sector has also been mired in controversy. Two Bitcoin Ponzi Schemes Collapsed in Kenya in the Last Two Years.
What is Ponzi Scheme?
original investor Initially a higher rate of return on their investment is given, but they need more investors in the scheme to maintain that level of return
more investors are willing to join, but since their investment is used to pay the returns of the original investors and grow the scheme, they get less money from their investment. In return they seek out more investors to increase their returns.
plan collapsed When the number of new investors dwindles and returns dry up
Investors, mostly Kenyans, in one of the cryptocurrency scams are said to have lost over $25m, and have not gotten their money back.
I spoke to an investor who lost nearly $30,000 (£21,000) in an African cryptocurrency scheme and, to my surprise, he believed that his appetite for risk would still motivate him to give it another shot if The offer was enough.
If people have such a mindset, then it is no wonder that they keep on losing money.
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