Mega Thread:

Kenya Bitcoin Fraud Case at Nairobi's Milimani Court

Police Case No. 113/205/2017
On the morning of Friday 17, November '17 Emma visited Equity Bank to inquire why her bank account reflected a negative balance 1/
Staff working at the bank cldnt tell her why, b/c they did not know. Took them 6 hours to figure who had flagged her account 2/
Officials from CID/CBK Bank Fraud Investigation Unit BFIU led by a Mr. Jackson arrived at the bank and escorted Emma to their offices under false pretenses 3/
On the car back to BFIU headquarters, officers turned hostile, harassed her, called her a criminal, attempted to extort money from her. Emma was accompanied by a friend (who recorded the convo on phone) 4/
At BFIU offices, official explained why she'd been called in. Over 10 million KES stolen from I&M bank and wired to multiple bank accounts at Equity Bank, Cooperative and consequently to other bank accounts and Mpesa Paybill 5/
Emma's account had received 500k from an Equity Bank account linked to I&M electronic paper trail. 500 k from a Mr. Richard Wambugu Maina, account number 1150174811XXX 6/
Emma explained she is a bitcoin p2p trader on localbitcoins.com and the transaction was a Bitcoin sell order to a trader on the platform username BADASS20 7/
She produced her chat history from the platform. Showing the conversation btwn her and BADASS20 agreeing on terms of trade (screen shot available) 8/
Emma has been a p2p trader on LBC (localbitcoins) since 2014. She has a fully verified account. Nothing to hide.

BADASS20 LBC account was only 2 weeks only and NOT verified. 9/
LBC is like an email service. Identity verification is an OPTION. Emma explained to her, it was a normal trade like any other. There was no way for her to know the identity or motives of BADASS20 10/
Officer understood. She was in business, and there was no way for her to know.

He went on to take her fingerprints, threaten her she risked reputational damage and attempted to extort 150k from her 11/
To settle the trade, BADASS20 had wired money to E sums exceeding the sale price of bitcoin. 96,000 in excess.

Chat history shows BADASS20 requesting E to wire back the excess funds to an Equity Bank account belonging to Richard Wambugu Maina.

E wired back 96,000 12/
E refunded the 96,000 to BADASS20 - an account at Equity bank. It is how we found his number. See image 13/
Another Kenyan trader, SM was hauled in at CBK Pension House - BFIU Headquarters. His case was worse!

He traded 360k with BADASS20 like E, but received sums in excess of 50k. BADASS20 promised to open another trade to settle the extra 50k - he never opened another trade 14/
The extra 50k seemed suspicious - a conspiracy. But he too had a chat history from localbitcoins proving it was an innocent online trade.

Officers agreed this was evidence that they were innocent parties.

Still, the officers insisted both 200k 'cash bail' 15/
SM's father came in to aid the son. Dad was eager to get the son out of this mess at all costs. They paid the 200k 'cash bail' and left. SM was released

Emma's friend DM, who'd escorted her from Equity Bank, cldn't come up with the money in time. 16/
BFIU have this space they use as a temp cell for suspects. Emma spent the rest of the day at this make shift cell before transfer later to Kileleshwa Police station where she spent the night - Friday Night 17/
Back track a bit - Emma, myself and a group of 254 bitcoin p2p traders in Kenya share a whatsapp group.

All along she was filled us in on the unfolding events. But her phone went off late Friday evening - couldn't pick calls, no whatsapp

we were all in the dark at ths point 18/
Saturday Morning

Emma's friend DM comes through with 150k - officer receives cash, slips it in his drawer and lets Emma off on condition that she returns on Monday to finalize case.

Emma's friend btw, has friends in high places and also has a phone recording of extortion 19/
Emma, is one of the members of the Blockchain Association of Kenya - with other bitcoin p2p traders. I am the Chairman. Naturally, we are all concerned. DM too

On saturday afternoon i call DM to find out WTF happened? Is she ok? 20/
At this point i only have sketchy details, DM fills me in on what went down. Tells me they're at BFIU, to 'bail' out Emma.

He tells me Emma wan't the only one, tells me about SM. I ask for SM's number to get his side of the story. Remember, he was released 21/
First thing i ask SM, " did you get a receipt for the 'cash bail' you posted?" OR was it a something else - kitu kidogo?

No receipt was issued. He fills me in on the rest.

i call Cedric, Secretary General and brief him on Emma's situation. 22/
My friend Laban was visiting over the weekend. He used to work for Govt - risk, audit, compliance - well versed in how Govt works. Also a member of the association.

I explain what happened.

First thing he says - every government agency payment requires an official receipt! 23/
Emma finally calls - surprisingly calm - she explains everything. Apparently, she wasn't officially charged with anything. No records at the police station in Kileleshwa - no OB number - a standard procedure.

Case is looking more fishy. 24/
She says they plan to haul in more p2p traders from localbitcoins linked to the stolen I&M funds. We agree to meet on Monday morning for a debrief then tag along for the Monday 2pm BFIU meet.

this cld happen to other traders in our grp so, its important we set precedence 25/
Meanwhile, Laban and I spend the rest of weekend dissecting the case. looking at past cases in court involving BFIU.

Our main concerns are 26/
her bank account - will she be refunded?
why was it flagged - CBK has guidelines on flagging suspicious TXns
what exactly is BFIU and what authority do they hav
bitcoin is not illegal - so nothing wrong there

lots of research - kenyalaw.org was a great resource! 27/
its right about the time i tweeted this on Sunday. i was pretty confident by this time Emma was not in the wrong and the officers were taking advantage of her youth 28/
Monday, first thing in the morning at 11am, Laban and I meet Emma at TRM mall for chai. She is venting - i am taking down notes. Everything.

1 pm we take a taxify to BFIU - CBK Pension House. 29/
Im on the move again. Will continue in an hour. . . . 30/
at 2 pm we are at BFIU - myself and Emma. We are at Officer Jackson's Office. I introduce myself as a member of the association - no more. he explains what happens, his version of events 31/
He shows me a printed copy of the compromised bank accounts - 6.6 million to Equity Bank account Paybill accounts, 3.something million to Cooperative Bank. Looks legit so far.

i pretend I'm buying the BS. 32/
He says he is aware Bitcoin is not regulated in Kenya "its not legal tender" he says. he gets it - he has no authority over what happens in Bitcoinland. He cant go after the person who runs bitcoin - its decentralized lol! We all agree 33/
So then, i start with the hard questions. What crime has she committed? She wasnt aware she was trading with a fraudster. nothing wrong with trading bitcoin.

I ask him, why he did not issue a receipt for the supposed 'cash bail' 34/
He switches his story. The 150k received over the weekend was for a cash bail he says. "We dont issue receipts on the weekends. We had to wait till Monday" he says. Pulls out a wad of cash - 150k from his drawer to prove to me the cash is intact 35/
I then ask him why SM was released yet Emma had to spend the night in jail, yet it is the same case.

He gets defensive and yaps on about bla bla bla - defending himself without admitting fault - typical 36/
I tell him i work for the press and I am writing this story for an online news publication.

Now he's angry. "My friend, are you now interrogating me?"

I push his buttons. Im assertive - i did my homework 37/
His tone changes and i pull back. We talk about the need for KYC and some sort of controls to avoid fraudsters exploiting our members.

he asks me to step out and give them some minutes alone. 38/
I wait in the lobby. emma comes back and shares what happened while i was out. Now we have to wait for officer to process the cash bail - officially this time. the 150k is now bail.

He now has to call back SM to process his 200k bail too 39/
You see, he cant charge Emma and not charge SM. It is the same case. If Emma declines to bribe, then SM has to be called in too.

E and I agree she shldn't lose 150k + 500k frozen funds for being a victim. So we hang around the BFIU for the rest of the day. Waiting 40/
Officer assures us her 150k bail is being processed. She should be home by end of day.

Meanwhile, SM calls in sick, says he cant make it 41/
I was tweeting from BFIU offices that afternoon here

I feel confident E will be home by evening. I excuse myself, i have a meet at 5. See you later E 42/
Meet at 5 was with my lawyer friend Tommy. I want a lawyer's opinion on all this. We meet at my local drinks - Konyagi etc.

Tommy agrees its extortion.

But at least she's free now.

Drinks till early morning. I dont look at my phone till next day morning 43/
Shocker!

Tuesday 6am morning, dozens of messages from DM and E. Apparently, officers detained her again! This time at Kilimani police.

Sh!t! now i need to get a lawyer. I try Tommy - phone is off.

i call Jesse, my other lawyer friend from SM Muhia & Co Advocates 44/
He recommends a colleague - Nancy. Send me her number. He says he has a court hearing till 10 am.

I call Nancy - she's in Thika for another case and won't be back till Wednesday morning. She suggests i go with Jesse, she'll take over on Wednesday when she gets back. Ok, good 45/
I call Emma and tell her i found a lawyer, we're on our way. by 10 am. Its 8.30am so i swing by Kileleshwa police to checkk if E's case was entered in the registry.

it wasnt. 46/
Cops tell me BFIU brought her in on Friday evening. They do this often - use Kileleshwa police for holding suspects overnight. They tell me BFIU are powerful - they dont need to make an entry in the registry. They can detain her as a suspect 47/
I call Emma to tell her Im heading over to BFIU. She tells me there's now a 3rd guy who's been brought in.

He too received funds from BADASS20, but a much higher amt than she did. They are co-sharing a cell a BFIU. 48/
New guy's name is Tim and he had a lawyer come in that morning - Tuesday. I get his number and call him to find out what his lawyer had to say abt. What did they agree?

Cash bail for him too it seems. But we have to wait for inspector to get back from a hearing 49/
11 am. Lawyer arrives - i tell him everything.

SM also checks in with his lawyer.

3 lawyer now. things start moving fast!

Officer says we come back afternoon and wrap up. Fair 50/
Thursday newspaper, Daily nation

"Two Charged With Bid to Steal 10 million"

/62

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