Three peer-to-peer Bitcoin traders in Kenya, Emma Kariuki, Stanley Mumo, and Timothy Gachehe were arrested and arraigned in court for allegedly conducting a banking fraud. The trio Bitcoin traders were detained for alleged illegal transactions traded on Localbitcoins.com.
The Milimani Law Courts in the capital Nairobi charged the three with conspiracy to commit a felony and were released on a cash bail of Ksh. 500,000 ($4,840) on Wednesday, Nov. 22. It is being alleged that the trio traded at Localbitcoins on the user account ‘BADASS20’, an account that is barely three weeks old, and conducting a Ksh. 10 million ($96,805) banking fraud.
The authorities then followed the money trail, which led them to three local bank accounts held by the trio. The authorities allege the trio stole the money from Safaricom Pay Bill Number 517822 and I&M Bank. They then channeled the money through Bitcoin transactions, which the trio sold, via the peer-to-peer Bitcoin lending platform.
It is alleged that user BADASS20 paid for the transactions in excess by Ksh. 96,000 ($929), then Emma was asked to send the remaining balance to a local bank account. On the other hand, Stanley traded with BADASS20 Ksh. 360,000 ($3,485), and the transaction was overpaid by Ksh. 50,000 ($484). Then BADASS20 is said to have promised to open another trade that will settle the extra 50,000. That transaction did not take place.
In the charge sheet, it is alleged that Emma had conspired to steal Ksh. 10,244,544 via the above said Safaricom Paybill number. Although both Emma and Stanley only got Ksh. 500,000 as per the Bitcoin traded; the party from whom the money was being received was, however, not charged, nor were they present at the court.
Stanley and Emma were arrested on Friday, Nov. 17, but Emma was released Saturday morning only to be rearrested on Money and detained until the next day. The identity of BADASS20 is yet to be established as Localbitcoins.com does not keep records on their customers. Also, the three suspects deny knowing BADASS20 and the source of the funds.