Another cryptocurrency scam has seen investors stripped of their savings, after a Brazil-based Bitcoin investment scheme that focused on Kenyan investors collapsed, losing some their life savings. Velox 10 Global abruptly shut down its services last week with millions of dollars still owing to members, with the company’s websites going offline and communications going dark. In an all too familiar tale, the company wooed vulnerable and inexperienced people into putting their life savings into a scheme that they guaranteed would lead investors to an improved quality of life. Instead, they have been left in financial ruin.
Improbable Promises
Ricardo Rocha, Velox Group CEO, launched Velox 10 in October 2017 at an exclusive hotel in Nairobi, claiming that his company could guarantee returns of up to $4,000 per day through Bitcoin trading. At this point, Bitcoin had been on a steady increase since late 2016, with media outlets all around the world already reporting its unstoppable growth. Investors were required to sign up for a basic membership of $100, but to access the bigger returns they had to upgrade to higher tier memberships, with the returns supposedly increasing in line with how much they put in.
In line with the Ponzi scheme playbook, investors were promised up to 50% of the profits and were also told they could make more money if they introduced friends and family to the scheme, which many did. This is despite warnings from the then Central Bank of Kenya Governor Njuguna Ndung’u about investing in cryptocurrencies. A five-day trip to the UAE to meet “top business gurus” was also offered to the biggest investors, a promise that was never fulfilled.
Collapse and Arrest
By early 2018, some investors were already taking steps to get their money back and to stop the firm from operating in the country after discovering that it had raised funds illegally, meaning they had no protection should the fund collapse. By mid-2018 the internet was awash with warnings about Velox 10, but the firm kept up a pretence of operations while undergoing legal challenges, until it finally gave up the ghost just days ago.
Velox agent Daniel Gichuki, who accepted investors’ money on the company’s behalf, was arrested and arraigned for fraud, though he claims his innocence. Rocha was arrested following another investor meeting at the same hotel, although he was released shortly after. The case, which acts as another warning that guaranteed returns inevitably lead to guaranteed losses, continues to be investigated by Kenya’s police, and is another example of a scheme where Bitcoin’s reputation has been tarnished despite it playing no part in the scam at all.
