On January 8, 2020, Ugandan news sources reported that a pair of suspects were charged over an alleged crypto scam that defrauded 4,000 Ugandans out of $2.7m.
Samson Lwanga, 37, and Mary Nabunya, 53, appeared in court on January 6 and were charged with 65 counts tied to obtaining money by false pretense, according to Ugandan newspaper The Observer.
Dunamiscoins Resources Limited opened an office in central Uganda in November 2019 and started taking cash from local customers, promising 40% returns.
However, the firm’s office closed and angry investors were left with nowhere to turn after Dunamiscoins apparently disappeared with their cash.
The suspects fraudulently obtained between Shs 500,000 (£103) and Shs 140 million (£28,730) from each of the alleged victims. The suspects pleaded not guilty and have been remanded in custody until the next hearing on January 22.
State prosecutors told the court that they have over 4,000 registered complaints against the suspects – and there may be more to come.
Huge Relief for Crypto Investors in Uganda
The arrests and arraignment of the fraudsters come as a relief in the sense that Uganda does not recognize digital currencies as legitimate money. Therefore, it was uncertain whether police would provide necessary assistance to those who had been swindled.
It’s refreshing to see that victims are now getting the aid they deserve, and while crypto may not be considered legal tender, it has evidently made a big enough for the authorities to consider it a property that must be recovered if embezzled.
Like numerous other crypto-based scams, Dunamiscoins promised investors and employees large returns in a short space of time. However, after a month, the company shut down and left investors in turmoil. More or worse, employees, where many of whom were yet even to start their job, were laid off.
Mr. Lwanga is reportedly ready to refund funds to affected investors, but he allegedly can’t access the money as his company’s accounts have been frozen.
However, Sydney Asubo, the executive director of the Financial Intelligence Authority (FIA), declined to reveal how much money the frozen accounts hold:
“I can’t disclose how much is on the accounts, but what I can say, the money is not sufficient to cover all the claims.”
Are Cases of Crypto Scam Hindering Adoption in Africa?
Repeatedly, analysts have highlighted that the underdeveloped countries hold a huge potential for crypto adoption. Surprisingly, in these regions, especially in most parts of Africa, the rate of crypto adoption has been ultra-low. This is contrary to the regions of South America, mostly Latin America, who are all hands on deck in the crypto wheel.
Why is that so? The Belgian Financial Services and Markets Authority (FSMA) recently updated its list of known crypto investment scams. The number of deceitful crypto sites that are allegedly scamming innocent investors is up to 131 in October 2019.
Crypto aficionados believe such scams might be hindering crypto adoption in African nations, which have large numbers of unbanked individuals who could benefit from digital assets.