Currency dealer sued but DCI smells extortion plot

A collection of Bitcoin (virtual currency) tokens are displayed in this picture illustration, in Paris, France, December 8, 2017. /REUTERS
A collection of Bitcoin (virtual currency) tokens are displayed in this picture illustration, in Paris, France, December 8, 2017. /REUTERS

Brazilian crypto currency dealer Velox 10 Global Limited has found itself in a storm just three months after launching its Kenyan branch last October.

Seven of its members seek to stop it from operating in the country. They say in a suit filed at the Milimani High Court, Nairobi, that they recently looked into Velox and discovered that it is only licensed to deal in nonfinancial assets, meaning the firm has been illegally collecting funds from Kenyans with the promise of high returns after investing their money in bitcoins.

Bernard Mulwa, Joshua Obebo, Nancy Kamau, George Itabari, Barnabas Mwangi, Bernard Makira and Stanslaus Mutua say Velox appears to be a pyramid scheme and want the court to stop its operations in Kenya. The seven members do not, however, disclose how much they have invested in the firm. They say people willing to invest in Velox were promised monthly returns of between 30 and 50 per cent.

They have included the Central Bank of Kenya, Capital Markets Authority and the Directorate of Criminal Investigations in the suit as respondents. They say the Kenyan agencies failed to stop Velox from collecting funds from the public. They have also included Hotel Intercontinental, which hosts the crypto currency dealer’s Kenyan brach. They want the hotel compelled to evict Velox.

Also included in the suit are Velox owners Ricardo Rocha and an individual only identified as Wagner. None of the respondents in the suit have filed responses.

“The plaintiffs were shocked to find out that Velox is carrying out illegal and fraudulent activities in Kenya — carrying on with the business of financial and investment services while its registration indicates that it can only manage nonfinancial assets. The plaintiffs are apprehensive of the safety of their deposits and/or investments, as they will have no recourse if Velox swindles them or flees with their funds,” the seven investors say.

But the DCI has asked the High Court to confirm if the suit was indeed filed. In a letter, it says it is probing an incident of extortion. The letter suggests that the suit may have been used to extort money from Velox’s owners. “This office is investigating a case of extortion where the above suit was used. Kindly confirm if the same was filed and provide us with the filed documents,” the letter says.