Clients lose Shs10b in cryptocurrency scam
Police are holding one of the directors of Dunamiscoin Resources Limited, a cryptocurrency company and is hunting four other directors for allegedly fleecing thousands of Ugandans of about Shs10b in a cryptocurrency scam.
Mr Samson Lwanga was arrested last week and is due to appear in court this week.
Mr Patrick Onyango, the Kampala Metropolitan police spokesperson, said Mr Lwanga was arrested last Thursday near Dunamiscoin offices on Namirembe Road in Kampala.
“We have already opened a general inquiry file and investigations are going on. We recorded statements from the complainants and arrested one of the directors called Samson Lwanga who is currently detained at Old Kampala Police Station,” Mr Onyango said.
“According to him (Lwanga), they are willing to refund the money, but the problem is that Financial Intelligence Authority froze their accounts. And they cannot access or withdraw any money. We are going to get in touch with Financial Intelligence Authority to prove if what Lwanga is telling us is true on freezing the accounts,” he added.
Mr Lwanga said most of the victims deposited between Shs1 and Shs10m every month.
The company has been running branches in other city suburbs such as Ndeeba, at Freedom City in Namasuba and in other districts such as Mbale, Masaka, Mukono and Arua.
I attended a secret meeting of the victims at KABS Guest House on Martin Road in Old Kampala on Saturday, and heard one of them, an Indian, saying he had lost Shs250m in the crypto currency scam.
Another victim said she had lured many people to join the scheme. She said her aunt collapsed upon being informed that they had been duped and fleeced, while another is facing arrest after she acquired a Shs4m loan to invest but failed to recover the money.
According to Mr Arthur Mpeirwe, from Mpeirwe and Company Advocates, the victims’ lawyer, said in the meeting that he contacted a Bank of Uganda official, who confirmed that Dunamiscoin operated three accounts in Centenary Bank, GT Bank, and Stanbic Bank.
The Dunamiscoin website also confirms the company held accounts in the three banks.
The website also indicates that Dunamiscons is private limited company incorporated in Uganda whose registration number is 8002000148167.
The website describes the company as: “The company’s responsibility is to introduce the public to cutting-edge innovations in the world of online trading and other financial services. Dunamiscoins Resource Ltd. (DRL) is also committed to providing customised corporate financial and real estate services to members; micro, small and medium enterprises.”
Mr Mpeirwe told the meeting he had received partial information from Centenary Bank that Dunamiscoin held Shs10b on the account which has since been blocked.
Meanwhile, it is yet to be confirmed how much money is being held in other two bank accounts which have all been blocked.
Another victim said she discovered they had been conned after confirming with the Moroto Centenary Bank branch, but declined to reveal how much she lost in the scam.
According to a compiled list during the meeting, at least 1,000 victims had registered in the cryptocurrency deal but other victims said the number is close to 10,000 people involved.
The company is said to have started operations in March and many people joined.
“A lot of them invested, got their first profits and invested more money. The profits were flowing and business was good,” said one of the victims, who did not reveal his name.
A statement from the company website reads: “Enjoy the boom in the cryptocurrency market, earn an amazing 30 per cent in 21 working days as returns on your partnership with us. A special offer of 40 per cent for 2 million shillings and above.”
It was not until last Tuesday that the bubble burst, and they learnt that they had been duped. The money was gone. The bosses were gone too. Offices closed and phones switched off. The truth then sank in. It was a scam.
While sitting across a table in a restaurant at Ham Shopping grounds, one of the victims, a one Mutebi told Daily Monitor that: “I was duped. I have lost Shs63m. It was an investment I made with my wife and children. But I am not the only one. We were many in the business. I am told other branches have been closed too.”
Mutebi’s story is familiar to the Biblical story of Adam, Eve and the snake in the garden of Eden. He was introduced to the business through his wife.
She had also been lured by a one, Osbert Mulungi, who had been working as manager at Ndeeba branch. They had met at her workplace.
Mutebi said Mulungi talked to him enthusiastically at the beginning, convincing him to be among the few joining the digital money economy. He obliged.
“I inquired whether Dunamiscoins was insured and indeed, I found out that they were insured with Jubilee Insurance after making a call to the company. I went to Uganda Microfinance Regulatory Authority and they were registered as a microfinance institution. That gave me hope that I was dealing with genuine people,” Mutebi said.
“Mulungi told me to partner with Dunamiscoins, we would deposit a minimum of Shs100,000 and within 21 working days, we would receive a 30 per cent profit. This money would come and we never had any worry,” he lamented.
“I started with Shs5m as deposit in July. And after 21 days, they gave me Shs7m. We agreed with my wife to withdraw our savings from other banks and we started investing in Dunamiscoins. The business was good until my wife called me on Tuesday informing me that Dunamiscoins had closed all its premises. That’s when we realised they had duped us,” he added.
Finance and BoU warning
On October 5, the Ministry of Finance issued a statement warning the public about cryptocurrencies.
“The government of Uganda does not recognise any cryptocurrency as legal tender in Uganda. The general public is further advised of the following risks associated with crypto-currencies; Most crypto-currencies such as Bitcoin and Ethereum are not backed by assets or government guarantees, therefore holders of these cryptocurrencies are fully exposed to the risk of loss or diminishing value as the issuers are not obliged to exchange them for legal currency or other value.
The nature of cryptocurrencies make them attractive for use in criminal transactions such as money laundering, sale of prohibited goods and services, and fraudulent venture such as Ponzi and pyramid schemes,” the statement read in part.
The Bank of Uganda also issued a statement in 2017 warning Ugandans about cryptocurrency scams.
“Bank of Uganda warns the general public that whoever wishes to invest their hard earned savings in Cryptocurrency forms such as One-coin, Bitcoin, Ripple, Peercoin, Namecoin, Dogecoin,” the statement reads in part.
Background
Cryptocurrency scams have been rising mainly in Kampala and other major towns but many victims can’t realise until it’s too late. The scammers are excellent plotters.
They rent fancy offices, invest heavily in marketing materials, create a hype on social media and are good at using business jargons. Last week, Mr Andrew Kaggwa, the director of Global Cryptocurrency Limited, also located on Namirembe Road was arrested by the Internal Security Organisation after fleecing his clients of their money in a Ponzi scheme. In April, Daily Monitor reported that more than 200 people had sued the proprietor of D9 Club seeking to recover their money lost in a fraudulent Ponzi scheme in 2017 initiated by his company.
