The Capital Markets Authority Warns Kenyans Against Investing in Unlicensed MMFs, Forex, and Crypto
The Capital Markets Authority has warned that unlicensed dealers often operate fraudulent investment schemes, such as forex and crypto trading.
In an investor alert released on Friday, May 8, the Capital Markets Authority cautioned that many unregulated entities are luring members of the public with promises of unusually high returns, only for victims to lose their money without any legal protection.
They target unwary Kenyans via social media, messaging apps, websites, and online trading platforms. CMA pinpointed that investors who channel funds through such entities risk losing their entire investment because the firms operate outside the provisions of the Capital Markets Act.
CMA warned that victims of fraudulent schemes have little or no help since the authority cannot intervene or recover funds invested through unlicensed entities. It added that investors bear the full financial risk when dealing with unregulated firms.
The firm now wants Kenyans to first verify whether investment firms, brokers, forex dealers, or online trading platforms are licensed. This is before sending money or opening accounts. The CMA has directed the public to use its official online register to confirm whether a company or dealer has been approved to operate in Kenya’s capital markets.
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Increased Online Scams in Kenya
The warning comes after growing concerns over the rise of suspicious online investment platforms. They promise quick profits through forex trading, cryptocurrency investments, and digital savings plans. In recent years, several Kenyans have reported losing millions of shillings to pyramid schemes and fraudulent investment applications. These later collapse or disappear with clients’ funds.
One of the easiest ways to identify pyramid and fraudulent investment schemes is through the excessively high and unrealistic returns promised. The CMA advised members of the public to exercise caution. Seek professional financial advice, and only invest through firms listed on the regulator’s approved licensees register.
