Thousands of Kenyans Stranded as US Investment Platform Freezes Withdrawals
Thousands of Kenyans have been left unable to access their money after a United States-based investment platform froze withdrawals, triggering concern among investors who had deposited funds into the scheme.
The platform had attracted a large membership in Kenya, with teachers making up a significant portion of its members alongside other investors recruited mainly through workplaces and referrals.
False Regulatory Citations
Investors who attempted to withdraw their money from September 4 were instead shown a notice citing the United States PATRIOT Act and a rule by the Financial Industry Regulatory Authority (FINRA) — a U.S. organisation with which the platform is not associated.
Some investors were also reportedly instructed to deposit additional funds before their accounts could be unlocked, raising further concerns over access to their money.
Minimum Entry of KSh65,000
The investment scheme had been marketed in Kenya through an organisation known as Global Investment Group, with prospective members required to put in a minimum of about KSh65,000.
Investors were promised daily returns through copy-trading, allowing them to automatically mirror the trading of other experienced people involving major international companies in the U.S.
Recruitment reportedly spread through workplaces, with some teachers introducing colleagues to the scheme in staff rooms, while other investors reportedly took salary loans to raise the required entry amount.
Over 12,000 Kenyans Affected
While the scale of the scheme remains unclear, preliminary reports indicate that it attracted more than 12,000 Kenyans into the fraudulent investment scheme.
Matungulu Member of Parliament Stephen Mule raised concerns in Parliament on August 12, asking the Finance and National Planning Committee to investigate the ownership and control of the platform after some Kenyans began raising concerns.
CMA Warning
On September 12, the Capital Markets Authority (CMA) subsequently listed the platform among 15 entities it said were operating in the country without approval. The CMA warned members of the public against dealing with the listed entities, saying they were not licensed to undertake regulated capital markets activities in the country.
“The Capital Markets Authority (the Authority) wishes to caution the public against several entities purporting to offer investment services in Kenya without the requisite licensing or approval,” the regulator warned.
What Investors Should Do
Investors who deposited funds into the scheme are urged to report their cases to the DCI and the CMA. The regulator has repeatedly cautioned the public to verify the licensing status of any entity offering investment services before committing funds.