Shocked Kenya crypto "investors" hit Twitter yesterday to complain about their inability to withdraw funds from their crypto wallets in an investment scheme called Bitstream Circle which appears to have shut down after mopping US$10m from majority Kenyans and other African victims of the scam.
The scheme promised returns of 5-10% daily and you had to register with a minimum of $20 (KES2,200) to join the bonanza.
As crypto enthusiast, Kimani Capital, who goes by the telling handle @retireby29 tweeted, he overcame his initial suspicions after following BT for a couple of weeks during which he saw a training video and also learnt that a physical meeting with "Investors" had taken place in Nairobi.
The training video showed investors how to open an account and trade on the platform.
The business model according to him, was:
1. You deposit $20 in their trading exchange
2. You get added to the Telegram Group
3. BT gives trading signals at specific time periods, 5 times a day.
4. Use the signals to trade on the "Exchange".
5. Make guaranteed 5-8% return on investment daily.
Investors were asked to follow instructions on daily trading where they would be issued with specific guidelines and amounts to trade at given times of the day.
"You had to strictly follow the instructions to the letter," @retireby29 says. "You had to strictly trade at the respective time...so literally I had to set alarms and stop what I was doing during trading time."
He says over 300 Kenyans, and over 500 Africans from 7 different countries were signing up daily to Bitstream.
Transactions were done using the dollar-backed stablecoin USDT. The cryptocurrency has the same exchange rate to the shilling as the US dollar.
One withdrawal per day was allowed which he says would take 30 minutes to reflect in his Binance account.
Things looked to be going well until one day, 13th March, 2022, investors encountered a hitch withdrawing their funds. They were informed that a system upgrade was underway and would be back online in 5 hours. That is when, @retireby29 says, he knew the gig was up.
But before the curtain call, the scammers could not resist one last caper and anyone who sought customer support was asked to "deposit" 10% of their investment, and they would be able to withdraw all their funds. Needless to say, those funds also disappeared, along with Bitstream Circle, or BT as the investors called it.
It turns out that the basic Ponzi scheme works the same whether in the village or on the net, new gullible people's money pays those who came before them, and so on, until the scheme is saturated.
Folks who had been warned about the suspect fundamentals of the scheme, in typical fashion, bristled and dismissed the party-poopers.
The Central Bank of Kenya in 2016, warned Kenyans against getting into crypto products adding that there is no recourse in law for those who burnt their fingers. Earlier this year, the CBK Governor, Patrick Njoroge reiterated that the regulator had not changed its position regarding crypto products. He however, promised that a broader policy outlook on the crypto space, including but not limited to cryptocurrencies, would be forthcoming in the near to mid-term.
Kenyans however, have been very active in peer to peer crypto-trading ranking number 1 globally according to Chainalysis. Overall, the country is ranked number 5 in the Global Crypto Adoption Index, behind Vietnam, India, Pakistan, and Ukraine.
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