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Kenya issues ICO warning after investors lose millions

Kenya , 17 Jan 2020

Kenya issues ICO warning after investors lose millions

The Capital Markets Authority (CMA) in Kenya has issued a second warning to the public regarding investment in initial coin offerings.

This follows media reports in which those behind the NuruCoin offering are alleged to have defrauded investors to the tune of Kshs 2.7-billion.

Nurucoin had promised 11 000 investors a return of ten times their investment in the pre-ICO share sale, but the ICO never took place as scheduled.

According to local media, the company shut down its offices, its website is no longer available and the whereabouts of chief executive officer Isaac Mwendwa Muthui is currently unknown.

As revealed by local dailies, the CMA is now investigating the organisation.

In its statement the CMA said, "It is notified for general public that the CMA has not as of this date, approved any initial coin offering. The ongoing offerings are unregulated and speculative investments with considerable risks to the investors."

The CMA added that most ICOs are shrouded in unclear information that even the investors fail to fully understand.

"CMA is cognizant of the importance of FinTech and the benefits that can be derived from leveraging on block chain technology and is willing to work with interested parties through the already established sand box model for purposes of supporting innovative FinTech products in a controlled and safe environment."

According to a Blockchain and AI Taskforce report released by the government, cryptocurrency can transform the country's financial sector, but more regulation is needed.

This is the CMA's second warning regarding ICO schemes, the first issued in February 2018.

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