Justice for victims as Ugandan Cryptoscam, Dunamiscoin Director meets his arrest

The police in Uganda has effected the arrest of the director of Dunamiscoin, a prominent cryptocurency company based in Uganda, over allegations of fraud. According to report, it was stated that over 1,000 investors and employees have been swindled of their investments. As revealed by the Ugandaan Daily Monitor on December 11, the Director, Samson Lwanga was arrested last week near the company’s office, and has been cooperating with the police. He is due to appear in court this week and police are on the hunt for four other of the group.

According to the Kampala Police Spokesperson, the arrest has revealed some good news. He was quoted as saying that Lwanga and his cohorts, were willing to refund the money, but the problem was that the Financial Intelligence Authority of Uganda, had frozen their accounts making it impossible to access or withdraw any money.  To that, he has assured Ugandians that they are going to get in touch with the Financial Intelligence Authority to prove the veracity of Lwanga’s claim.

The report of the fraud, also revealed that the fraud had gone even deeper than earlier thought. It was stated that Dunamiscoin Resources Limited had over 1,000 victims, all of whom were registered during a meeting last week. It also claimed that the number could be much more, with some insiders predicting that the actual number of victims to be over 10,000, and the amount of money stolen, estimated at UGX 2 billion ($2.7 million).

Despite the claim of frozen assets, Victims’ lawyer, Arthur Mpeirwe, has argued that e the company still had enough money to pay his client off. He claims that he contacted the Bank of Uganda and confirmed that the company had bank accounts as it claimed. He is also said to have evidence from one of the company’s banks verifying that Dunamiscoin had $2.7 million in its account, incidentally the same amount of money the victims lost.

Justice for victims as Ugandan Cryptoscam, Dunamiscoin Director meets his arrest 2

The scam worked like a pyramid scheme, paying off its earlier batch of clients with money collected from later clients. It is reported that on its website, it promised a certain percentage of remuneration to its customers.

 “Enjoy the boom in the cryptocurrency market, and 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.”

This alluring promise, ensured that those that benefited the first promised payout, ended up investing even more money than the first time. This was how the system was designed to work Priority was given to first investors, who would predictably start with small investments and when they got their Return on Investment, will have cause believe in the legibility of the scheme and want to invest in more money. More often than not, they would even go on to recruit others, thereby becoming brand ambassadors of the scheme and ignorant co-conspirators.

On this, one of the victims told his story:

“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 realized they had duped us.”

Dunamiscoin is just the latest crypto scam in an African country, after the likes of Twinkas, Ultimate Cycler, ABCDonor and the most popular till date, MMM. In Nigeria alone, people lost an estimated 18 billion Naira (or $60m as of March 2017) to MMM. With the increasing popularity of cryptos in the continent, more fraudsters are devising new ways to defraud investors of their money. While the phenomenon of fraud can be found in any institutions, it has really devastating consequences on the Blockchain Technology and Crytptocurrency space and as such, investors need to take extra caution to maintain their investments.

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