Kenya’s Capital Markets Authority (CMA)has issued a second warning to the public regarding investment in initial coin offerings after recent media reports on a coin offering called NuruCoin by ChurchBlaze Group Ltd. are said to have disappeared with Kshs 2.7-billion (€24+ Million Euro) from investors, doing a runner after the ICO.
In a report at Standard Media Kenya, Patrick Wameyo, a Nairobi-based financial literacy expert, termed the arrangement “pure fraud” executed by playing on the emotions of highly aspirational masses.
He stated the choice of the company name easily passed for a church-backed institution to draw in Christians, who form a majority of the population. Then there was the promise that technology is the next frontier for wealth creation.
“We have taken hope too far to believe in such schemes,” stated Wameyo, adding, “Where were the regulators?”
One source told Standard Media Kenya, that while there was a team hired to develop the blockchain database, all they did was build websites for the various products, including Nurucoin.
“We never had any blockchain database; it was just an ordinary website to post any information as directed,” they said.
Media reports from Kenya also noted that investigators attached to the Capital Markets Authority (CMA) confirmed they were seeking CEO Isaac Mwendwa Muthui to answer to charges of irregularly collecting funds from investors. Among the issues the probe seeks to unearth is how the self-styled pastor, who has admitted to never ministering at any church, was able to collect so much money undeterred. Investigators in the probe have reached out to the victims in the first step to understanding what they were promised and if indeed anything was delivered.
So, what really happened? In simple terms, people were lied to, and they invested their savings in the company, which had a religious backing in the name of Church Blaze Group. See, Kenyans are holy people, and anything that is associated with faith is as genuine as they come, right? In fact, Isaac Muthui was selling himself as a pastor, although he would later admit that he is not a church person.
According to the Standard, Isaac would go ahead and live lavishly with his new killing that started to raise suspicion among the organization’s leadership. Furthermore, the company began closing its regional offices once funding achieved the set target. Some leaders of the organization who claim Isaac edged them out of crucial decision-making processes left the Church Blaze for obvious reasons.
Muthui began burning cash almost immediately in order to fund his new lavish lifestyle with a fleet of new vehicles, first-class vacations overseas and a brand new house in one of Nairobi’s high-end neighbourhoods.
Muthui is apparently now holed up in Anaheim, California.
Here he is flogging the coin on youtube:
In its statement the CMA said:
“It is notified for the 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.”
Nurucoin had promised 11000 investors a return of ten times their investment in the pre-ICO share sale, but before the main sale – the ICO was to take place, the company shut down its offices, website and the chief executive officer and pastor Muthui has disappeared. Kenyans funded the project through PayPal and direct cash deposits into ChurchBlaze’s accounts held in a local bank.
The CMA is now investigating the organisation.
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 blockchain technology and is willing to work with interested parties through the already established sandbox 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.