CMA caution Kenyans against investing on crypto-asset markets

1
1052
Paul Muthaura, CEO Capital Markets Authority

In a deliberate effort to protect investors against emerging crypto-asset markets, the Capital Markets Authority (CMA) has cautioned the public against participating in any initial coin offering or trading in any coin exchange offered by Wiseman Talent Ventures.

In a cautionary presser, Paul Muthaura, the Authority’s CEO averred: “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,” adding that the authority was currently investigating the operations of the organization providing a platform for trading of the said coins on its exchange christened www.kenicoinexchange.com.

“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.”

Paul Muthaura, CEO, Capital Markets Authority

Noting that global trends in unregulated digital currencies demonstrates that the crypto-asset market is uncertain and has experienced accelerated boom and bust cycles, Muthaura was categorical that such platforms may expose investors to substantial losses.

Making reference to Wiseman Talent Ventures, the Authority stated that it had noted discrepancies in the information provided in the website and the information provide to CMA during interviews of Wisemen Talent Ventures leadership in relation to the total number of Kenicoin sold and the total funds raised.

The firm also promised guaranteed returns of 10 per cent monthly on the initial investment in coins which were issued at Sh100 at the Initial Coin Offering (ICO) and are now purportedly being marketed as trading at Sh2,000 at its Coin Exchange.

CMA asserted that Kencoin’s value being marketed as exponentially rising since its initial offering poses substantive information asymmetry, liquidity and fraud risks an assertion that has been opposed by Wiseman Talent Ventures proponents noting that whichever way it is viewed from, digital currencies is the future of transactions.

In February, the regulator issued a notice warning investors against taking part in ICOs, saying it had not approved any offerings. It said all ongoing offerings were unregulated and speculative investments with considerable risk exposure to investors.

Last year, the Central Bank of Kenya equally took a similar position, advising the public against Bitcoin, one of the most popular digital currencies. During a CIO Fintech Summit, the Central Bank Governor stressed: “There is no currency in crypto-currency.

“It is only the regulators who are not as fast-paced as the digital coins plus the threat of cyber-crime. In the meantime, when the regulations are not there and open to all manner of fraud, the risks are astronomical. Such crypto currency companies cannot have a concrete value, but in the near future when there is a regulation to contain digital currencies, the value of such companies will skyrocket,” said alluded the Wiseman Ventures Talent who sought anonymity.

1 COMMENT

  1. Dear Paul Muthaura,

    (My use of the word Coin throughout in quotes, such as “Coin” is deliberate, as a Coin normally has a value, secured in the national produce and the international trade, while a Crypto “Coin” is trust and faith based)

    It is very heart warming to see CMA standing strong against Cryptocurrencies (CC), given the CC’s ipso facto direct resemblance of a zero-game in line with Pyramid Schemes. Investing in CC resembles investing in a stock traded company without any assets behind.

    The CC corporates claim (!) that one is investing in the production cost of their “Coins”, yet multiple similar authorities such as CMA in Kenya – in example the Finish Bank (their director), and is it Vietnam – as a national stand on the same, have rejected these speculative instruments as the zero-games they are.

    I hope that Kenya as a nation can stand up, and go in front, protecting its population against being defrauded by the speculative nature of CC.

    Investing in a CC with its fluctuations up and down depending on the populace’s “Trust” in the same, resembles claiming that we are planting a tree together, only to see the original entrants ripping off all the branches as you go up, leaving nothing to the ones at the top. It is not yet criminal to issue “CryptoCoins”, in the same way Ponzi Schemes and other similar zero-games (such as Pyramid schemes) – yet – there is not much difference in the net outcome.

    If one is in doubt, now imagine this scenario here, scaled up, by inference or induction (this is a proven, and accurate mathematical principle of proof!)

    I buy a crypto “Coin” valued at Kshs 10,000. I sell it some 2 months later for 20,000, yielding a gain of 100% in 2 months, similar to a gain of 600% pro annum. I have now harvested Kshs 10,000 out of the thin, blue air. As long as everybody buys that single coin at ONE value and sell it at a HIGHER value, everybody is happy. The film breaks where now, suddenly my coin loses value. Let us for the sake of simplicity say, that the one who bought it from me, could not sell it for more than the same 10,000 I bought it for, then the buyer lost 10,000 and I gained 10,000. The total loss and gain between these two of us adds up to accurately 0 – namely PLUS 10,000 and MINUS 10,000.

    This scenario is identical to any other scenario experienced by any other trader in these Crypto-“Coins”. There is no difference – and if there is – then prove it. Combining 2 similar scenarios does not change this fact. Setting one scenario before or after the other (commutatively) does not change it either. Doing them in parallel (accumulative) does also not change the scenario. Even from a functional perspective one can consider 2 scenarios as 1, and thereby it is proven that the entire game of Crypto-“Currency” is a zero-game, due to that a sum of N scenarios can be represented by 1 scenario, and thereby, as there is no other influence in this, and as all currencies fluctuate up and down, it is obvious that this is just a zero-game, with nothing to cater for the crypto-“Currency”.

    There is – ipso facto – therefore nothing different between a randomized payment from the losers to the winners – and the Crypto-“Currency” scenario.

    It should therefore be banned, or – be licensed under the Betting and Games ministry as hazard, not different from playing in a Casino.

    Elevating anything Crypto”Currency” above the level of mere Casino play – such that you can “invest” in Crypto-“Currency” in line with “Investing” on the Roulette or Black Jack – is a falsum.

    Therefore, Paul Muthaura, you are doing everybody who reads your article a favour. Thanks!

    Sincerely
    David Svarrer

LEAVE A REPLY

Please enter your comment!
Please enter your name here