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Is KeniCoin Kenya’s First Homegrown Cryptocurrency Scam?

Is KeniCoin Kenya’s First Homegrown Cryptocurrency Scam?
KeniCoin is a Kenyan cryptocurrency that has been in the spotlight recently over allegations of potentially being a scam. BitcoinAfrica.io investigated KeniCoin to determine whether it is a legitimate cryptocurrency or a fraudulent operation. In this article, you will discover our findings.
What is KeniCoin?
KeniCoin claims to be a multi-utility cryptocurrency platform that is fueled by KeniCoin (KNC) tokens. According to the KeniCoin website, the cryptocurrency is backed by real businesses, which is supposed to make it a reliable and predictable payment option for vendors.
The platform claims to offer free and fast peer-to-peer online transactions. Moreover, KeniCoin investors will allegedly receive a high return on investment (ROI) on KNC tokens due to their limited supply and presence of a strong merchant network. Consumers, on the other hand, will be able to enjoy a 40 percent discount whenever they transact using KeniCoin.
Furthermore, KeniCoin claims to provide an alternative saving option to banks, which allows for micro-savings and provides interest. The website describes KeniCoin as the “Next Generation Banking Platform for the people in Kenya and Africa.”
How Does KeniCoin Work?
KeniCoin is marketed as an ERC-20 token based on the Ethereum blockchain. To purchase the cryptocurrency you have to register on the KeniCoin site and provide your name, a username, email address, and password. Once your account has been verified you can proceed to log in.
To get started, you have to fund your account using bitcoin (BTC) or fiat currency via mobile money.
Once you deposit money in your KeniCoin account, you will receive the equivalent amount of KNC in your in-platform wallet. However, during our analysis, we noticed the BTC wallet option appeared to be no longer working. It is unclear whether this is a technical problem or a shift to a fiat-only operation.
If you are looking to convert your KeniCoins to another cryptoasset, there are instructions on the site directing you to the KeniCoin Exchange . Information on the platform states users can trade KeniCoins (KNC) for bitcoin (BTC) or ether (ETH).
The exchange asserts that you can trade your KNC for fiat and withdraw your earnings via a direct bank transfer. Moreover, should you decide to lock away 50 or more KeniCoins in the platform, you are entitled to ten percent interest every month.
The KeniCoin ICO
KeniCoin launched an ICO in July 2018. The token sale was marketed aggressively on local radio and through KeniCoin agents. According to the site, ten million KNC tokens were provided for the ICO and retailed at KES 100 (worth around $1.00).
The site alleges $250,000 was raised from the token sale with 500,000 tokens being sold. Moreover, according to the KeniCoin whitepaper , the newly issued tokens will gain in value. Specifically, the company stated in the whitepaper:
“We are very sure that, within the first 12 month after ICO, the value of KeniCoin will have increased at least 30 folds, which is around 3000%.”
The project road map outlines that 20 percent of the funds raised will go to the founders with the bulk of the remainder being used to develop various platforms accepting KNC payments. The KeniCoin tokens were to be traded on the KeniCoin Exchange, which was launched soon thereafter.
Regulator Warns Against KeniCoin
In January 2019, the Capital Markets Authority (CMA), Kenya’s market regulator issued a press release warning the public against participating in the KeniCoin token sale or trading KNC. The CMA CEO, Paul Muthaura stated,
“It is important for the general public to note that the nature and features of the Capital Raising and Coins Trading promoted by Wiseman Talent Ventures is taking the form of Regulated activities which have not yet been approved by the Authority.”

[ALERT] CAUTIONARY STATEMENT ON INITIAL COIN OFFERING AND COIN TRADING #trading #ico #cryptocurrency #cryptoexchange #blockchain #capitalmarkets pic.twitter.com/DCPeChHl1J
— Capital Markets Authority_Kenya (@CMAKenya) January 3, 2019

The regulator expressed its concerns about KeniCoin promising investors a ten percent monthly return on their initial investment on KNC tokens. In addition, the CMA pointed out that KeniCoin was being marketed as rising exponentially in value since its ICO which posed “substantive information asymmetry, liquidity and fraud risks.”
“The Authority is currently investigating the operations of Wiseman Talent Ventures. We have noted discrepancies in the information provided on the firm’s website www.kenicoin.com and the information given to the Authority during interviews of Wiseman Talent Ventures leadership in relation to the total number of Kenicoin sold and the total funds raised,” Muthaura added.
Obscure Founders
Our efforts to establish the team behind KeniCoin also proved unsuccessful. According to the KeniCoin whitepaper, the founder of the cryptocurrency is Haron Muthomi Kiriba who is sometimes referred to as Haron Wiseman. We did a little digging to find out more about Wiseman.
What we managed to uncover was a Twitter account under the name Haron Wiseman, which described him as a transformational speaker and founder of Wiseman Talent Ventures. Wiseman Talent Ventures is mentioned in the CMA cautionary statement as the company behind KeniCoin. An online search for Wiseman Talent Ventures was only able to produce an office address.
Also, Haron Kiriba’s Twitter account appears to have been inactive for a while. His LinkedIn profile portrays him as the CEO of a property company. Nothing we uncovered pointed to any prior involvement in the cryptocurrency space or any other venture for that matter.
The KeniCoin whitepaper states that the cryptocurrency is supposedly developed by a number of international blockchain and AI experts. However, their names are not mentioned and their identities – if they ever actually existed – remain unknown which is standard practice in fraudulent cryptocurrency-based ventures.
Providing little to no public information about the company’s ownership structure does not help the company in its attempts to be perceived as a legitimate venture.
More Red Flags

A critical examination of the information provided on the KeniCoin site and whitepaper reveals a number of inconsistencies and falsehoods. For instance, the KeniCoin whitepaper claims the project is backed by a number of companies yet we can only prove one, Wiseman Talent Ventures, and even its existence is in doubt.
Also, the amount of funds raised during the concluded KeniCoin ICO seems unclear . The site claims $250,000 worth of KNC tokens were sold during its token sale. However, when it comes to distribution of ICO funds, the amount displayed is $5.3 million.
In addition, the company claims KNC is the first local digital currency to be released in the market with a network of up to 10,000 merchants. This is an outright falsehood with research failing to turn up a single business associated with KeniCoin. You will notice most of the statements concerning stability and increasing value of KNC tokens, are tied to the assurance of many businesses in the ecosystem.
Perhaps, the obvious flaw with KNC is the de facto promise of returns for early adopters . The whitepaper states KNC holders can expect the value of the token to increase by 3,000 percent in twelve months after the ICO. At the time of writing this article, the price of KeniCoin published on the company’s website was $3.45.
Currently, there is an update on KeniCoin Exchange teasing users about the launch of a new utility, that will result in the price of KNC rising to Ksh. 10,000 (worth around $100). Strangely, KeniCoin appears immune to market volatility and according to numbers presented on the platform, has so far managed to retain an upward trajectory.
Yet, this does not resonate with what we know of the crypto markets which are highly volatile. In fact, since early 2018, the value of most digital currencies have slumped as the markets have been experiencing a “crypto winter.”
It stands to reason any investment exhibiting a continued uptrend in price over a long period could indicate price manipulation or fraud.
A summary of KeniCoin’s potential red flags include:

The mystery surrounding the persona of Haron Wiseman, the alleged founder of KeniCoin
The company gives no insight into the ownership structure
The alleged rise in KeniCoin price without any real use case outside of trading
Lack of a merchant network driving adoption as is claimed in the whitepaper
A claim of profits for investors, which no real investment can ever guarantee
The Kenyan Capital Markets Authority has issued a warning against KeniCoin
Very little technical details on how the cryptocurrency actually works
KeniCoin can only be bought and sold on the company’s own exchange

Unavailability for Comment
BitcoinAfrica.io tried to contact KeniCoin to hear the company views on the issues raised by the Kenyan financial regulator. However, this proved difficult as our attempts to engage the KeniCoin team proved unsuccessful.
Initially, we tried to contact them using the phone numbers provided on its website. We managed to get through but were twice rebuffed with the response being “ongoing consultations with management.” At the time of writing this article, no feedback has been forthcoming from KeniCoin.
Interestingly, the KeniCoin staff member who we were able to reach on the phone expressed distrust for news agencies saying, “you social media guys are tarnishing our name.” The company does not seem to want to talk to the media.
BitcoinAfrica.io also attempted to reach out to the Nairobi-based company via social media but our attempts to get in contact with the company over Twitter, LinkedIn and Email were futile. The company’s email address does not work and the company’s Twitter account has been suspended.
Kenyan Crypto Twitter Responds to KeniCoin
Leading figures of the Kenyan cryptocurrency community responded on social media to KeniCoin advertisement on Kameme FM.
Micheal Kimani, Chairman of the Kenya Blockchain Association, tweeted: .

There is this KeniCoin marketed on Kameme fm as the next big thing, started at 50 now they are telling listeners it has gained up to 2k
this is a scam @kamemefm
Your management should take a second look
— Michael Kimani (@pesa_africa) December 30, 2018

Ken Kimathi, Kenya’s Remitano representative, also shared his opinion about the alleged digital currency scam. He tweeted :

There is a coin being advertised in Kameme Fm called KeniCoin. Let the people its a scam and people should be aware. The coin has no fundamentals and Utility @RobertAlai @pesa_africa @kenyanwalstreet
— AfricanWhale (@ken_Qimathi) December 30, 2018

And they were not the only Kenyans to voice their concerns on social media. An ample amount of Twitter users highlighted the project’s unrealistic earnings potential, which makes the company look like a fraudulent operation.

Why is Kenicoin being allowed to do such massive marketing?? Unless I missed something on their whitepaper this is a massive scam. Goodness. Who will be our brother's keeper?
— Gakinya MD (@gakinya_md) December 19, 2018


That Kenicoin on @kameme101 is a ponzi/pyramid scheme,lol ati what is "mining". Cyptocurrency is not about buying ,you are giving the owner actual money while he promises some profits in unknown future…
— kim (@kajonee) November 29, 2018


Any gullible person who falls for that con gospel from Kenicoin is setting up themselves for endless rounds of shafting with no lube.
— Nelson Kimaiga (@Nelsonkimaiga) December 5, 2018

Is KeniCoin a Scam?
While there may be people who believe that KeniCoin is a real investment opportunity, it would be hard to ignore the evidence that suggests the opposite.
KeniCoin has several of the same characteristics as crypto scams that have previously penetrated the African market.
KeniCoin may not be different from a typical MLM operation used by pyramid schemes like OneCoin and MMM , which succeeded in defrauding hundreds of thousands of Africans.
Conversely, one may argue that KeniCoin closely resembles a pump and dump scheme where the owners are making money by pumping up the value of KNC and then selling it for a profit on the open market. Once they have made enough profits, they exit, and users are left holding worthless coins.
Moreover, since price discovery for KNC tokens only occurs on the company’s own platform, it is impossible to say how much one KeniCoin is really worth.
Given that KeniCoin makes claims such as: “KeniCoin platform allows you to grow your wealth up to x12 every year,” it is difficult to see how this could possibly be a legitimate cryptocurrency investment.
Conclusion
Investors are always advised to conduct thorough research, consult experts, and use common sense before investing in any digital asset venture.
“Investments” like KeniCoin provide a good example of the type of cryptocurrency investment “opportunity” scheme to avoid. While no one can claim that KeniCoin is a scam until it has been declared a fraudulent operation by a court of law, the mountain of evidence against the company would suggest that it probably is.
The post Is KeniCoin Kenya’s First Homegrown Cryptocurrency Scam? appeared first on BitcoinAfrica.io .

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