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Is KeniCoin Kenya’s First Homegrown Cryptocurrency Scam?

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KeniCoin is a Kenyan cryptocurrency that has been in the spotlight recently over allegations of potentially being a scam. BitcoinAfrica.io investigated KeniCoin to determine whether it is a legitimate cryptocurrency or a fraudulent operation. In this article, you will discover our findings.

What is KeniCoin?

KeniCoin claims to be a multi-utility cryptocurrency platform that is fueled by KeniCoin (KNC) tokens. According to the KeniCoin website, the cryptocurrency is backed by real businesses, which is supposed to make it a reliable and predictable payment option for vendors.

The platform claims to offer free and fast peer-to-peer online transactions. Moreover, KeniCoin investors will allegedly receive a high return on investment (ROI) on KNC tokens due to their limited supply and presence of a strong merchant network. Consumers, on the other hand, will be able to enjoy a 40 percent discount whenever they transact using KeniCoin.

Furthermore, KeniCoin claims to provide an alternative saving option to banks, which allows for micro-savings and provides interest. The website describes KeniCoin as the “Next Generation Banking Platform for the people in Kenya and Africa.”

How Does KeniCoin Work?

KeniCoin is marketed as an ERC-20 token based on the Ethereum blockchain. To purchase the cryptocurrency you have to register on the KeniCoin site and provide your name, a username, email address, and password. Once your account has been verified you can proceed to log in.

To get started, you have to fund your account using bitcoin (BTC) or fiat currency via mobile money.

Once you deposit money in your KeniCoin account, you will receive the equivalent amount of KNC in your in-platform wallet. However, during our analysis, we noticed the BTC wallet option appeared to be no longer working. It is unclear whether this is a technical problem or a shift to a fiat-only operation.

If you are looking to convert your KeniCoins to another cryptoasset, there are instructions on the site directing you to the KeniCoin Exchange. Information on the platform states users can trade KeniCoins (KNC) for bitcoin (BTC) or ether (ETH).

The exchange asserts that you can trade your KNC for fiat and withdraw your earnings via a direct bank transfer. Moreover, should you decide to lock away 50 or more KeniCoins in the platform, you are entitled to ten percent interest every month.

The KeniCoin ICO

KeniCoin launched an ICO in July 2018. The token sale was marketed aggressively on local radio and through KeniCoin agents. According to the site, ten million KNC tokens were provided for the ICO and retailed at KES 100 (worth around $1.00).

The site alleges $250,000 was raised from the token sale with 500,000 tokens being sold. Moreover, according to the KeniCoin whitepaper, the newly issued tokens will gain in value. Specifically, the company stated in the whitepaper:

“We are very sure that, within the first 12 month after ICO, the value of KeniCoin will have increased at least 30 folds, which is around 3000%.”

The project road map outlines that 20 percent of the funds raised will go to the founders with the bulk of the remainder being used to develop various platforms accepting KNC payments. The KeniCoin tokens were to be traded on the KeniCoin Exchange, which was launched soon thereafter.

Regulator Warns Against KeniCoin

In January 2019, the Capital Markets Authority (CMA), Kenya’s market regulator issued a press release warning the public against participating in the KeniCoin token sale or trading KNC. The CMA CEO, Paul Muthaura stated,

“It is important for the general public to note that the nature and features of the Capital Raising and Coins Trading promoted by Wiseman Talent Ventures is taking the form of Regulated activities which have not yet been approved by the Authority.”

The regulator expressed its concerns about KeniCoin promising investors a ten percent monthly return on their initial investment on KNC tokens. In addition, the CMA pointed out that KeniCoin was being marketed as rising exponentially in value since its ICO which posed “substantive information asymmetry, liquidity and fraud risks.”

“The Authority is currently investigating the operations of Wiseman Talent Ventures. We have noted discrepancies in the information provided on the firm’s website www.kenicoin.com and the information given to the Authority during interviews of Wiseman Talent Ventures leadership in relation to the total number of Kenicoin sold and the total funds raised,” Muthaura added.

Obscure Founders

AnonymousOur efforts to establish the team behind KeniCoin also proved unsuccessful. According to the KeniCoin whitepaper, the founder of the cryptocurrency is Haron Muthomi Kiriba who is sometimes referred to as Haron Wiseman. We did a little digging to find out more about Wiseman.

What we managed to uncover was a Twitter account under the name Haron Wiseman, which described him as a transformational speaker and founder of Wiseman Talent Ventures. Wiseman Talent Ventures is mentioned in the CMA cautionary statement as the company behind KeniCoin. An online search for Wiseman Talent Ventures was only able to produce an office address.

Also, Haron Kiriba’s Twitter account appears to have been inactive for a while. His LinkedIn profile portrays him as the CEO of a property company. Nothing we uncovered pointed to any prior involvement in the cryptocurrency space or any other venture for that matter.

The KeniCoin whitepaper states that the cryptocurrency is supposedly developed by a number of international blockchain and AI experts. However, their names are not mentioned and their identities – if they ever actually existed – remain unknown which is standard practice in fraudulent cryptocurrency-based ventures.

Providing little to no public information about the company’s ownership structure does not help the company in its attempts to be perceived as a legitimate venture.

More Red Flags

KeniCoin

A critical examination of the information provided on the KeniCoin site and whitepaper reveals a number of inconsistencies and falsehoods. For instance, the KeniCoin whitepaper claims the project is backed by a number of companies yet we can only prove one, Wiseman Talent Ventures, and even its existence is in doubt.

Also, the amount of funds raised during the concluded KeniCoin ICO seems unclear. The site claims $250,000 worth of KNC tokens were sold during its token sale. However, when it comes to distribution of ICO funds, the amount displayed is $5.3 million.

In addition, the company claims KNC is the first local digital currency to be released in the market with a network of up to 10,000 merchants. This is an outright falsehood with research failing to turn up a single business associated with KeniCoin. You will notice most of the statements concerning stability and increasing value of KNC tokens, are tied to the assurance of many businesses in the ecosystem.

Perhaps, the obvious flaw with KNC is the de facto promise of returns for early adopters. The whitepaper states KNC holders can expect the value of the token to increase by 3,000 percent in twelve months after the ICO. At the time of writing this article, the price of KeniCoin published on the company’s website was $3.45.

Currently, there is an update on KeniCoin Exchange teasing users about the launch of a new utility, that will result in the price of KNC rising to Ksh. 10,000 (worth around $100). Strangely, KeniCoin appears immune to market volatility and according to numbers presented on the platform, has so far managed to retain an upward trajectory.

Yet, this does not resonate with what we know of the crypto markets which are highly volatile. In fact, since early 2018, the value of most digital currencies have slumped as the markets have been experiencing a “crypto winter.”

It stands to reason any investment exhibiting a continued uptrend in price over a long period could indicate price manipulation or fraud.

A summary of KeniCoin’s potential red flags include:

  • The mystery surrounding the persona of Haron Wiseman, the alleged founder of KeniCoin
  • The company gives no insight into the ownership structure
  • The alleged rise in KeniCoin price without any real use case outside of trading
  • Lack of a merchant network driving adoption as is claimed in the whitepaper
  • A claim of profits for investors, which no real investment can ever guarantee
  • The Kenyan Capital Markets Authority has issued a warning against KeniCoin
  • Very little technical details on how the cryptocurrency actually works
  • KeniCoin can only be bought and sold on the company’s own exchange

Unavailability for Comment

BitcoinAfrica.io tried to contact KeniCoin to hear the company views on the issues raised by the Kenyan financial regulator. However, this proved difficult as our attempts to engage the KeniCoin team proved unsuccessful.

Initially, we tried to contact them using the phone numbers provided on its website. We managed to get through but were twice rebuffed with the response being “ongoing consultations with management.” At the time of writing this article, no feedback has been forthcoming from KeniCoin.

Interestingly, the KeniCoin staff member who we were able to reach on the phone expressed distrust for news agencies saying, “you social media guys are tarnishing our name.” The company does not seem to want to talk to the media.

KeniCoin ScamBitcoinAfrica.io also attempted to reach out to the Nairobi-based company via social media but our attempts to get in contact with the company over Twitter, LinkedIn and Email were futile. The company’s email address does not work and the company’s Twitter account has been suspended.

Kenyan Crypto Twitter Responds to KeniCoin

Leading figures of the Kenyan cryptocurrency community responded on social media to KeniCoin advertisement on Kameme FM.

Micheal Kimani, Chairman of the Kenya Blockchain Association, tweeted:.

Ken Kimathi, Kenya’s Remitano representative, also shared his opinion about the alleged digital currency scam. He tweeted:

And they were not the only Kenyans to voice their concerns on social media. An ample amount of Twitter users highlighted the project’s unrealistic earnings potential, which makes the company look like a fraudulent operation.

Is KeniCoin a Scam?

Bitcoin ScamWhile there may be people who believe that KeniCoin is a real investment opportunity, it would be hard to ignore the evidence that suggests the opposite.

KeniCoin has several of the same characteristics as crypto scams that have previously penetrated the African market.

KeniCoin may not be different from a typical MLM operation used by pyramid schemes like OneCoin and MMM, which succeeded in defrauding hundreds of thousands of Africans.

Conversely, one may argue that KeniCoin closely resembles a pump and dump scheme where the owners are making money by pumping up the value of KNC and then selling it for a profit on the open market. Once they have made enough profits, they exit, and users are left holding worthless coins.

Moreover, since price discovery for KNC tokens only occurs on the company’s own platform, it is impossible to say how much one KeniCoin is really worth.

Given that KeniCoin makes claims such as: “KeniCoin platform allows you to grow your wealth up to x12 every year,” it is difficult to see how this could possibly be a legitimate cryptocurrency investment.

Conclusion

Investors are always advised to conduct thorough research, consult experts, and use common sense before investing in any digital asset venture.

“Investments” like KeniCoin provide a good example of the type of cryptocurrency investment “opportunity” to avoid. While no one can claim that KeniCoin is a scam until it has been declared a fraudulent operation by a court of law, the mountain of evidence against the company would suggest that it probably is.

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5 Reasons Why Online Casinos Should Adopt Cryptocurrencies

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online casinos

Online casinos are at the forefront of technological innovation in the gambling industry, while cryptocurrencies are arguably the most innovative payment solution on the Internet. 

In this article, we will discuss the top five reasons why online casinos should consider adopting cryptocurrencies as a payment method. 

Access to More Markets

Online casinos heavily rely on online payment platforms such as PayPal and Stripe. Despite the fact that online casinos are available in all areas with Internet connectivity, not all Internet users are able to use these platforms. 

Payment platforms such as PayPal and Stripe are not available in all jurisdictions. Cameroon, Central African Republic, Cote D’Ivoire (Ivory Coast), Equatorial Guinea, Gabon, and Ghana, for example, are not supported by PayPal. What’s more, some countries have low debit card and credit card penetration, making it difficult for customers from such markets to use online casinos.

Cryptocurrency payments are available worldwide and present an important use case for internet casinos that want to reach an entirely new market of prospective bettors who are unaccounted for by payment platforms. By supporting cryptocurrencies, such as bitcoin, online casinos stand a chance of reaching new users from markets without popular online payment platform support or penetration.

Access to a New Community of Bettors

The cryptocurrency community has grown exponentially over the last few years with big businesses built around the cryptocurrency ecosystem and its users.

Bitcoin Accepted

With a total cryptocurrency market capitalisation of $266 billion, online casinos that support cryptocurrencies could reach a new community of bettors who prefer to use digital currencies over other payment methods. 

The cryptocurrency community is riding a huge wave of momentum. Many companies that have strategically placed themselves in the ecosystem have seen exponential growth as a result. Online casinos that add cryptocurrency payments could also benefit from the momentum of a rapidly growing online economy.

Lower Fees  

Online gambling providers are generating healthy profits according to market statistics and predictions. However, these platforms could increase profits further if less of their revenue was lost to payment platform fees. 

Bank cards and online payment platforms charge a percentage for all transactions. Fees for cryptocurrency transactions, however, are usually far less and are generally paid by the user. By adding cryptocurrencies, online casinos could accept payments faster and incur lower on fees.

Currently, small merchants pay between two to four percent per credit card transaction, which often involves additional “hidden fees.” Cryptocurrency transaction fees are comparatively low and do not include hidden fees.  

No Chargeback Fraud

Chargeback fraud, also known as friendly fraud, occurs when a consumer makes an online purchase with their credit card and then demands a chargeback from the issuing bank after receiving the purchased goods or services.

Cryptocurrencies offer online merchants protection from chargeback fraud. Unlike credit card payments where transactions can be disputed even after they have been charged, cryptocurrency transactions are final.

For online gambling providers who accept exclusively cryptocurrency payments, chargeback fraud is a thing of the past. 

Increased Publicity

Cryptocurrencies have one of the biggest communities online, full of passionate people who are always happy to propagate positive news, such as the addition of cryptocurrency as a payment method at an online casino store. Additionally, online platforms that accept cryptocurrency as a means of payment also receive extra coverage from cryptocurrency media.

This additional publicity comes in handy for online casinos due to the saturated nature of the industry, which requires platforms to leverage every opportunity that puts them ahead of the competition.

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Is Nigeria Likely to Formalise Remittances and Become the Third-Largest Inbound Market Worldwide?

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IMTC AFRICA 2019

Nigeria is the sixth-largest recipient of remittances in the world with an estimated volume of nearly $25 billion a year. This estimate for remittances flow doesn’t account for the informal market, that even if it is shrinking, as most analysts believe, it adds approximately $10 to $15 billion a year to the formal number. That places remittances for Nigeria at around $40 billion. If this were to be true, then it would squarely place the country as having the third-largest volume of remittances in the entire world, ahead of the Philippines and Mexico with highly formal markets.

IMTC AfricaIn a blog post published by remittance expert Hugo Cuevas-Mohr, he discussed the volume of remittances to Nigeria and the importance of achieving more accurate figures and the success in formalising the remittance market in Nigeria. These are also key topics that will be extensively examined at IMTC AFRICA 2019, a conference that will take place in Lagos on September 24-26 at the EKO Hotel. IMTC is the leading gathering for international money transfer, cross-border payment, and Fintech companies around the world and has chosen Nigeria as the site of its biannual African event to help in the innovation, formalisation, and transparency of remittances in the country.

Why Formalisation is Necessary

Parallel markets, or informal markets, are notorious for skewing a country’s volume, revenue, and wealth statistics; in an age where data is glorified, it is clear to see why this is such a problem. Countries are valued and respected based on their stats, and if Nigeria’s stats are not reflecting the true volume of remittances, then their significance is being missed.

The Nigerian Naira is traded at different rates on the parallel market than on the official market. For instance, as of August 6, the Central Bank of Nigeria valued 1 USD at 306 NGN (Niara), whereas the parallel markets revealed that 1 USD was actually trading at 360 NGN. Such a large discrepancy in the exchange rate reveals just a portion of the issues taking place. If the parallel market exchange rates are correct, then it is extremely unlikely that Nigeria will be successful in curbing the informal market. 

Nigeria’s parallel markets have been prevalent for some time now, but the issue became serious in 2016 when the Central Bank of Nigeria, to curb the informal market, limited the number of legal money transfers to only three International MTOs: Western Union, MoneyGram, and Ria. This subsequently forced all other MTOs to call upon CBN to allow more MTOs to be licensed, jumping to more than 60 in three years. Has the strategy from CBN been successful?

Mr. Cuevas-Mohr states in his blog: “The remittance market in terms of companies abroad serving the Nigerian Diaspora is growing now at a fast pace as remittance volumes to the country increase, partly due to organic growth and partly due to more funds being channeled through official channels.”

Leon Isaacs, IMTC AFRICA 2019 Co-Chair, and an expert in remittances will discuss extensively at the conference the findings that his surveys and data gathering work is revealing. Other topics to be discussed at this trendsetting event will be the impact of Payment Service Banks and Fintechs on remittances, the role of blockchain and cryptocurrencies, the importance of strong compliance and risk management and the importance of MTO partnerships with local banks and Fintechs to help to formalise remittances.

Nigeria And the Mobile Industry

man with mobileAnother pressing topic at the conference is that of the mobile industry. In a recent development, the Nigerian government is allowing mobile companies to directly offer financial services. Previously, mobile companies were required to form rigid agreements with banks to offer financial services in the country. These new companies will be known as Payment Service Banks (PSBs), similar to how India enables mobile companies to offer such services.

This is massive news for the world of remittances as PSBs can give their unbanked customers, and generally to all low-income residents, the opportunity to manage mobile money as the digital ecosystem grows. It can also impact the government’s financial inclusion initiatives. The impact of the PSBs in the remittance market is hard to predict but everybody will be watching. Mr. Cuevas-Mohr said: “It will take time to see the impact to the market of Telcos being allowed finally to offer themselves financial services, and remittances.”

As many MTOs participating at the IMTC AFRICA 2019 conference in Lagos have expressed, the event comes at the best time for the industry in Africa. Filled with a compliance course, an innovation forum, panel discussions, keynote speakers, roundtables, and ample time to network with industry leaders, the event will be a gathering of the Who-is-Who in the field of African remittances.

The article was contributed by David Cullinan. 

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South Africans Can Now Invest in Crypto-Asset Bundles

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Crypto-Asset Bundles

South Africans can now invest in crypto-asset bundles thanks to Revix, a digital asset management platform incorporated in the UK. Revix aims to expose investors to 80 percent of the cryptocurrency market through bundles.

Bitcoin Africa talked to Revix’s co-founder Sean Sanders to better understand this new digital asset investment option.

Passive Crypto Investment Through Bundles

Bundles are cryptocurrency portfolios that expose an investor to a diversified number of cryptoassets at a low cost while reducing risk. These bundles are comprised of the top cryptocurrencies that are rebalanced each month to keep investments up-to-date with the changing market.

“The name Revix stands for ‘revolutionary index’ and we plan to shake up the cryptocurrency space by providing a secure and smarter way to invest in digital currencies. We are looking to broaden the appeal of cryptocurrencies by making the investment experience seamless. We target investors who are interested in crypto, but do not have the time or inclination to research every opportunity, work out the technicalities of investing, or properly understand the challenges of holding their assets,” said Sanders.

Revix uses diversification because it is difficult to forecast which cryptocurrencies will gain traction and which will not. By holding a diversified basket of assets, the investors’ risk declines while returns can increase.

Revix offers the following bundles:

  1. Top ten bundle: this bundle contains the top ten cryptocurrencies.
  2. Payment bundle: this bundle includes the top five largest cryptocurrencies focused on payments.
  3. Platform bundle: this bundle holds the five biggest platform-focused cryptocurrencies.
  4. Privacy bundle: this bundle comprises of the three largest privacy cryptocurrencies.

Sean Sanders and Louis Buys founded Revix in 2018 and held a launch on April 2019. The co-founders also raised R10 million during the first round of funding from Sabvest, an investment group listed on the Johannesburg Stock Exchange (JSE).

How Bundles Work

To get started on Revix, register and deposit funds in your preferred currency. Investors can begin with as little as R500. Once you have deposited funds, you can now choose a bundle and invest in it.

Revix

According to Sanders, Revix leverages proprietary technology to link investors to crypto exchanges with a smart price routing algorithm that looks for the best available price for investors.

“By connecting with global, liquid markets and using technology, we can get better prices than what has otherwise been available to local investors. Major factors for local investors are the currency devaluation and geopolitical risk hedges that cryptocurrencies offer. With a rand depreciating over the long term, moving into an asset class that is peer-to-peer, borderless, and uncorrelated to South African specific risks is attractive,” he told Bitcoin Africa.

Revix charges a one percent transaction fee when purchasing or selling a bundle. The platform also ensures that all fees incurred are displayed to the user. Investors’ funds are secured in cold storage across multiple-vaulted locations.

Why Invest in Crypto?

trading strategies you should knowSanders believes that investing in cryptoassets offers South Africans an opportunity to “see the birth and application” of blockchain technology.

“The world of cryptocurrencies is not coming, it is already here, and we have already seen this asset class increase by multiples compared to all other asset classes out there. I mean, cryptocurrencies are the top-performing asset class of the last decade which should not be overlooked,” Sanders asserted.

Rather than waiting to see how the technology pans out, Sanders advocates taking advantage of the opportunity at the present. However, he advises against investing your life savings in cryptocurrencies. All you need to experience crypto and the blockchain is a small portion of your wealth, he said.

Why South Africa?

Revix is offering its investment products in South Africa because the country enables businesses to build online platforms at low costs and the regulatory environment supports enterprises in the crypto scene.

Furthermore, South Africa has a pool of professionals with technical skills in the blockchain and computer science fields. This factor is attractive to companies in the blockchain and crypto industry like Revix.

“South Africa is a key market for us as the country has a diversity of people with vastly different demographics allowing us to test specific concepts and strategies and get customer feedback while managing scale,” Sanders stated.

The Revix platform is attracting a wide range of users such as fresh graduates, retirees, investors well-versed with traditional finance but who are only now learning about crypto, and investors who are unfamiliar with traditional finance but knowledgeable about crypto.

Advocating for Crypto Regulation

Revix

Revix’s Louis Buys and Sean Sanders

Although the regulatory environment in South Africa is crypto-friendly, Sanders thinks that more should be done to enable businesses like his to run more smoothly.

Since a clear regulatory guideline is missing, crypto businesses like Revix take longer to create relationships with banks because of the perceived risk and they operate unlicensed. Therefore, Sanders is welcoming local regulation because it will offer more protection to consumers, provide guidelines on how to treat this asset class, and encourage institutions to participate in this market.

Sanders is an entrepreneur in the crypto space and has established other startups besides Revix. In the past, he has worked for a VC firm and an investment management company. With regards to recent trends in the crypto space, Sanders believes that Facebook’s Libra coin will drive the adoption and acceptance of digital currencies globally.

The South African Reserve Bank announced earlier in 2019 that it is carrying out a central bank digital currency feasibility study while the South African Revenue Service announced cryptocurrency tax laws in 2018. These events could indicate that South Africa is taking positive steps towards recognising, accepting, and adopting digital currencies.

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