The Kenyan police have arrested three peer-to-peer Bitcoin brokers Emma Kariuki, Stanley Mumo, and Timothy Gachehe for trading the stolen money through the local trading platform Local Bitcoins. The funds were reportedly stolen by a person using pseudonym “BADASS20” from the I&M Bank and a Safaricom Pay Bill account.
According to a report by regional media Kenyan Wall Street, the anonymous thief has stolen KEH 10.2 mln ( around $100,000) from the financial establishments and used the money to buy Bitcoins via the exchange Local Bitcoins.
The local police were able to find the stolen money to several bank accounts, including those owned by the arrested Bitcoin traders.
During the police investigation, traders said that the money used by anonymous thieves to buy Bitcoin was stolen and claimed they were “normal” business activity. Based on their chat history on the business platform, they are telling the truth.
Despite their seemingly valid defense, the Kenyan Banking Fraud Investigation Unit (BFIU) has still arrested merchants and suspended bank accounts. Brokers, however, were able to post bails and finally released. He is scheduled to attend the preliminary hearing in December 2017 before a full hearing in January 2018.
State of cryptocurrency trading in Kenya
The digital currency peer-to-peer (P2P) market in Kenya is spreading awareness about the warning issued by the country’s central bank in 2015, advising citizens to abstain from transacting Bitcoin and other virtual currencies.
Banking fraud involving Cryptocurrencies In this recent case a chilling effect on the local virtual currency market is expected. If this event forces the intent to introduce intense measures to control the market, or industry players consider it exclusively to ignore it.