Uganda Targets Cryptocurrencies in Ponzi Scheme Crackdown

Uganda Targets Cryptocurrencies in Ponzi Scheme Crackdown

Uganda wants to ban pyramid schemes, but cryptocurrencies may come under fire as well

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Ugandan legislators are exploring the role of cryptocurrencies in connection with pyramid scheme frauds that are often found in the country, local newspaper PML Daily reported on Feb. 4.

While legislators are moving forward with a proposal to criminalize Ponzi schemes, cryptocurrencies may come under fire as well.

Speaking at the parliament, the State Minister of Finance David Bahati revealed that the government has established a task force to explore cryptocurrencies and their potential applications in Uganda. The task force will also focus on global industry 4.0 trends that could result in major developments for the country and region.

Though Uganda’s attitude to cryptocurrencies is one of the more welcoming in the region, its citizens have fallen victim to a number of scams.

The government’s latest initiative seeks to educate citizens and discourage them from investing in Ponzi schemes. A wider ban is also being proposed, as Bahati explained:

“We are also discussing with the Internal Affairs Ministry to ban such schemes. The challenge is that operators of such schemes register as financial institutions but when they get on the ground, their operations are different.”

Cryptocurrencies are often used by the fraudsters to collect the money, which put them under the government’s radar:

“We have continued to advise the public to desist from investing in cryptocurrencies since they are yet to be supervised and regulated in Uganda. We have, therefore, strongly encouraged the members of the public to do their business transactions with only licensed financial institutions.”

Bahati also revealed that the Ministry of Justice is currently amending the Penal Code Act to criminalize Ponzi schemes, while also adopting clear guidelines to correctly identify the owners of a newly registered company.

Furthermore, the country’s Anti-Money Laundering Act is being modified to include virtual assets providers under the regulation’s umbrella.

“This will bring virtual assets service providers including providers of cryptocurrencies to be brought under the purview of the Financial Intelligence Authority,” explained Bahati.

However, parliament member Mwine Mpaka accused the government of protecting the creators of Ponzi schemes:

“The Financial Intelligence Authority submitted a list of all companies involved in this fraudulent business and the Ministry of Finance knows them but they are quiet.”

Mpaka then revealed that he knows a bishop involved in the business, noting that he is “heavily guarded.”

The Parliament’s speaker Rebecca Kadaga then noted that the issue of pyramid schemes had been often raised, but no action was taken. The latest initiative may have been prompted by a petition from the victims of the Dunamiscoin scam, submitted in January.

The scheme is alleged to have stolen approximately $2.7 million from investors and employees. The company promised 40% returns over the initial investment.


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Uganda wants to ban pyramid schemes, but cryptocurrencies may come under fire as well

Crypto Pyramid Scheme in Uganda Steals Employees’ Money and Closes

Crypto Pyramid Scheme in Uganda Steals Employees’ Money and Closes

An alleged crypto pyramid in Uganda stole money from its employees and covertly closed down its offices

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An alleged cryptocurrency pyramid scheme in Uganda has fled after defrauding dozens of victims that invested in and worked for the scheme.

Dunamiscoins Resources Limited opened in Masaka last month and started inviting individuals to invest and become part of its “digital currency network,” independent Ugandan newspaper Daily Monitor reports Dec. 5. The firm’s offices closed down covertly just a month after opening, with employees reportedly coming to the office to find it empty.

Dunamiscoins required employees to pay to start work

A businessman who worked next to Dunamiscoins’ closed offices reportedly said that Dunamiscoins was convincing people to join its firm by promising 40% returns on cash investments. According to the witness, the firm was apparently working with money transfer companies in the city to recruit new people to the scheme.

Additionally, Dunamiscoins allegedly asked each applicant to pay 20,000 Uganda shillings ($5) to register with the company. According to a former Dunamiscoins salesperson, the firm promised high returns on investments but fleeced its employees of money paid for registration as well.

Daily Monitor attempted to get in touch with Dunamiscoins but none of the phone numbers obtained by the publication was available, the report notes. Cointelegraph reached out to an email address mentioned on Dunamiscoins’ website only to receive a notice that the listed address couldn’t be found.

The report follows a recent announcement by the deputy governor of the Bank of Uganda that online cryptocurrency businesses are not regulated in the country to date. In June 2019, the official warned the public on the limited protections offered them when they invest in unregulated cryptocurrencies, also outlining a number of risks associated with crypto trading and adoption.


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An alleged crypto pyramid in Uganda stole money from its employees and covertly closed down its offices

President of Uganda to Lead Blockchain Conference in Kampala in July

President of Uganda to Lead Blockchain Conference in Kampala in July

President Yoweri Museveni of Uganda will be leading a conference in June on blockchain technologies and the “fourth industrial revolution”

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The President of Uganda, Yoweri Museveni, will officiate the 2019 Africa Blockchain Conference, according to a report by Kabuubi Media Africa on June 24

According to the report, The 2019 Africa Blockchain Conference — not to be confused with  The Blockchain Africa Conference 2019 which occurred in April — will be held from July 3 to July 4, and the theme is ’Africa 4.0:  Preparing Africa for the 4th Industrial Revolution.’ The conference topics will reportedly include fintech, payment systems, and the future of education.

President Museveni reportedly supported the use of blockchain technology in Uganda during his inaugural speech. Museveni is said to have cited four economic areas that he believes should be supported by blockchain technology: agriculture, manufacturing and processing, services, and the ICT sector.

Blockchain tech firm CryptoSavannah will reportedly be one of the organizers for the 2019 conference. The company’s director, Noah Baalesanvu, commented on the maturation of cryptocurrencies in Africa, saying:

“While initially being marred by scams and cons, significant value has moved to cryptos with major markets like Nigeria, Kenya and South Africa with significant crypto holdings also trading activity.”

In 2018, CryptoSavannah partnered with the major cryptocurrency exchange Binance to gain financial support for blockchain growth in Uganda. Binance CEO Changpeng Zhao claimed that his organization would create thousands of jobs in the country, tweeting:

“@binance will partner with @cryptosavannah @AggieKonde @HelenHaiyu to support Uganda’s economic transformation and youth employment through blockchain, embracing the 4th industrial revolution. We will do this by creating thousands of jobs and bringing investments to Uganda.”

As previously reported by Cointelegraph, Binance Charity Foundation signed a Memorandum of Understanding with a non-governmental organization based out of Uganda this April. The MoU aims to bolster the educational system of Kampala by providing a variety of supplies, ranging from solar panels to sanitary pads.


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President Yoweri Museveni of Uganda will be leading a conference in June on blockchain technologies and the “fourth industrial revolution”