Prior to May 2018, Zimbabwe-based bitcoin exchange Golix was bullish about its future prospects. The startup claimed it had raised $32 million from a token sale and had plans to set up operations in several other African countries. However, more than a year later, the digital asset exchange has had a reversal of fortunes and, after its forced shutdown in Zimbabwe, some of Golix’s former clients are struggling to get their funds reimbursed despite promises and frantic efforts to recover these. 

Embezzlement Allegations

Former Golix users now point to possible embezzlement of funds by Golix executives while one investor in the startup blames the hostile operating environment as the reason for the company’s general failure.

Tawanda Kembo was the chief executive officer (CEO) of Golix when it was shut down in Zimbabwe. Bitcoin Africa reached out to him to get his side of the story but he had not responded to our questions at the time of publishing.

However, Bitcoin Africa still managed to contact Taurai Chinyamakubvu, an individual who says he was an investor in the company. Chinyamakubvu claimed he is not aware if client funds had been reimbursed or not since he was not involved in the day to day affairs of the crypto startup.

“On funds, you can check with the CEO, he was doing the day to day stuff. I was just an investor,” Chinyamakubvu pushed back when asked if they had recovered client funds that were reportedly locked in banks.

In May 2018, Zimbabwe’s central bank issued a directive that forbade financial institutions from dealing with crypto exchanges. According to Golix, this led to banks blocking access to client funds and the company from using the financial system.

Central Bank Defiance And Crypto Adoption

When asked why Golix had not resumed operations following a High Court ruling that set aside the central bank order, Chinyamakubvu suggested that Golix’s Zimbabwe operations remain hamstrung by the central bank’s reluctance to lift the order.

“They (Reserve Bank of Zimbabwe) did not lift the order they sent to banks. So no bank wants to defy a regulator. But that said, you muddy the water once, that’s enough to change its colour for a while,” he stated.

Chinyamakubvu is convinced that the central bank’s apparent defiance of a court ruling continues to hinder the growth of the crypto space in a country that should be embracing privately-issued cryptocurrencies.

Zimbabwe has been plagued by hyperinflation for the past two decades, which is spurred on by a volatile fiat currency. Critics point to the central bank’s penchant for unrestrained printing of money as the main cause of the country’s currency troubles.

The Golix investor called the central bank’s decision to shut down the crypto exchange ‘retrogressive’.

Ironically, the Reserve Bank of Zimbabwe recently announced the setting up of a committee to study financial technologies such as bitcoin. The regulator now says it wants to come up with what it calls a “National Fintech Strategy.”

Disappeared Client Funds

Bitcoin Africa also reached out to former Golix clients as it tried to establish what happened with their funds. Some did not respond but a few did – although they requested anonymity. One lady, in particular, expressed exasperation with the way Golix has been handling the issue.

“I do not know about others but I still have not been reimbursed. Tawanda (CEO of Golix) has made several promises to settle but nothing has happened,” claimed the lady who preferred to remain anonymous.

She further explained that currently there is nothing noteworthy happening but promised to reveal more details as and when they become known. 

Kembo on the Run?

Following the central bank decision to stifle cryptocurrency trading, some crypto traders have gone on to create informal trading platforms using social media networks like Whatsapp, Telegram, and Facebook.

Bitcoin Africa was also able to get access to one such Whatsapp chat group feed wherein clients are discussing strategies of recovering funds from Golix. In a discussion that occurred in July 2019, one member of the group asks fellow members to furnish her with information that includes Kembo’s personal identification number or even a vehicle registration number. This could then be used to help a hired tracing agent to locate him.

Tawanda Kembo, Golix CEO

It is apparent from the discussions that Kembo has made several promises – including re-payment plans – to reimburse but nothing has happened to date. Adding intrigue to the controversy, this client claims Tawanda told them he had lost the key to the cold storage wallet. Thus, he could not access the bitcoin.

Keys to a crypto wallet are essentially a passcode that grants access to funds and without them, the funds are lost and cannot be recovered.

In the meantime, another post on the same thread suggests that Chinyamakubvu was being disingenuous when he expressed ignorance about the status of client funds. In the post, another member insists that prior to the central bank order, Golix was asked to remove all funds before accounts were closed.

The anonymous member was referring to a part of the central bank circular to banks which states the following:

“Exit any existing relationships with virtual currency exchanges within sixty days of the date of this Circular and proceed to liquidate and restitute existing account balances.”

This central bank circular was issued on May 11, 2018, and Golix seemingly had enough time to exit from banks as well as to reimburse clients.

No Consumer Protection

The anonymous member suggests that since this did not happen, the issue should now be treated as a criminal case.

It is apparent from the rest of the discussion that members were aware of the risks involved with crypto businesses. The central bank had warned the public of risks of dealing with cryptocurrencies and associated businesses prior to Golix’s demise.

Zimbabwe does not have consumer protection laws that specifically deal cryptocurrencies and those dealing with such digital currencies do so at own risk, a point clearly articulated by the central bank circular. Perhaps it is with this in mind that some Golix clients are now pursuing fraud charges against Golix executives.

Lack of legal protection is another factor inhibiting the widespread adoption of cryptocurrencies but that may yet change as the central bank is now having a change of heart.

Bitcoin Africa will continue to follow the events surrounding the alleged exit scam of Golix and update our readers when new information surfaces.

South Africa’s new cryptocurrency exchange OVEX will offer a new kind of interest account where users earn up to seven percent on their wallet balances. This feature helps the exchange to stand out among its peers in South Africa.

The OVEX Offerings

OVEX is a new digital asset exchange that offers over 18 cryptocurrencies such as Bitcoin Cash, Bitcoin, TrueUSD, Bitcoin SV, Tron, and Crypto20.

Additionally, the exchange provides users with mobile-ready services where they can buy or sell currencies instantly. OVEX also offers a secure, decentralised identity service.

Perhaps most interestingly, OVEX will also offer interest-bearing accounts where investors can receive seven percent interesting on their digital asset holdings, according to its website.

The OVEX CEO Jonathan Ovadia said: “The team and I have been working on this project for over a year and are incredibly proud of the offering we have built. Our goal is to provide the South African market with a world-class product and more importantly world-class liquidity. We have developed an exchange for all types of crypto enthusiasts, with an advanced trading interface as well as a simple one-click buy or sell option.”

Other perks that come with using OVEX include the ability to buy and sell digital assets with the South African Rand and purchasing cryptocurrency at international rates without paying a premium. This benefit is thanks to a collaboration between OVEX and San-Francisco based company TrustToken Inc, which enables users to buy TrueUSD at bank rates and have it deposited straight to their OVEX wallets. TrustToken is the company behind TrueUSD.

A third-party audit report recently showed that TrueUSD has actual US dollar backing. As of March 31 2019, TrustToken was holding $199,063,885 while the TrueUSD tokens issued were 198,982,291.

OVEX also uses artificial intelligence to verify the identity of users withdrawing more than R20,000 (§1,435). The verification process takes only minutes. Blockchain identity company Civic played a role in making this feature a success.

Furthermore, with OVEX, you can fully access an API with your account that allows you to trade programmatically using data.

Funding

OVEX has received an undisclosed amount of money from Newtown Partners, a venture capital firm run by international entrepreneurs, Vinny Lingham and Llew Claasen. Lingham is a Shark Tank investor and Civic’s chief executive officer while Claasen is the executive director of Bitcoin Foundation.

“South African’s have a deep interest in cryptocurrency and bitcoin especially. It is my hope that OVEX will provide South Africa a secure, affordable, and fully featured avenue to get into the crypto space,” stated Vinny Lingham.

According to a report by The South African, OVEX will be releasing a podcast series with the aim of getting more South Africans involved in the global conversation on the future of blockchain technology and cryptocurrencies.

Bitcoin Africa sat down with Bitsoko CEO Frank Deya to discuss what the Kenya-based blockchain startup has been working on and what the future holds for the company and the market it operates in.

The Bitsoko App

Bitsoko is developing a mobile money wallet app and a point of sale (PoS) service that allows micro, small, and medium enterprises to promote sales through promotions and loyalties and manage their businesses online.

The Bitsoko app has not entered the Kenyan market formally yet but has been going through a pilot exercise that entails testing, debugging, and acquiring the “relevant data on the market demands and future consumer adoption.”

The app allows merchants to accept payments for their goods or services via bitcoin or mobile money.

“I would say the interest [surrounding the app] has grown significantly and we are on the right path so far. The biggest challenge remains technical. We are, however, working around this by initiating collaborative programs with other blockchain developers. We are confident that scaling this service will not be a hurdle once we launch,” said Deya.

The Bitsoko app allows merchants to receive customer feedback while offering customers loyalty points, promotions, and delivery options. The app also enables merchants to manage their inventory and to keep track of their bills.

Trends for Bitcoin in Kenya

Bitcoin and altcoins have been gaining popularity in Kenya as more people trade, hold, and use these currencies. However, Deya says the conversation is moving beyond bitcoin.

“At Bitsoko, we are placing our bets on tokenisation, which presents an opportunity for businesses to digitise their assets. It is an area we are very keen on pursuing, we want to ‘tokenise Africa’.

“Tokenisation will lead to the creation of new wealth, enhance transparency, and seamless transfer of assets among other benefits,” he added.

Regulating Cryptocurrencies Through Inclusive Participation in Kenya

The crypto space in Kenya remains unregulated. However, regulators have issued warnings against initial coin offerings (ICOs) and cryptocurrencies. Recently, the Kenyan Parliament gave the Treasury two weeks to decide the fate of cryptocurrencies in the country.

However, Deya is of the following opinion: “We acknowledge that regulators are looking after the interest of end users, which is important. However, I feel that it’s too early to regulate the technology and many of its possible applications is still at a nascent stage. It is also imperative that developers, innovators, and the entire community are represented in the process. The blockchain is here to promote decentralisation and, therefore, no one party should or can have a monopoly. Inclusive participation will get us ahead much faster.”

Inclusive participation could be helpful in ensuring that regulators get to protect consumers from the potential risks cryptocurrencies pose without compromising the livelihood of Kenyans in this space.

“The issue of cryptocurrencies is evolving and we can take a position as a country. This is a delicate balance between supporting innovation and killing it,” Treasury cabinet secretary Henry Rotich said.

The Bitsoko Promise

Bitsoko intends to solve the problems of high mobile money fees and safety by offering transaction fees as low as 0.5 percent and providing users with their transaction history so that they can better manage their money. In addition, Bitsoko plans to offer users access to a wide range of financial and payment services through its mobile app.

“We are bringing together the versatility of blockchain-based technology and the good attributes of mobile money. To do this successfully, we are working with local industry players as well as merchants to make their services available on the payment network. By integrating specific services such as energy providers, paying bills, payroll solutions for merchants in Kenya, we hypothesise that these easy-to-use services will create a system that can support small-scale payments in all aspects of financial lives,” says Bitsoko.

Despite the cautions the Central Bank of Kenya has issued against cryptocurrencies, the crypto space is growing in the East African nation unperturbed with projects such as Bitsoko working towards changing the mobile payments sector.