Africa’s most valuable unicorn, Flutterwave, is still not out of trouble in Kenya. About $3 million of his money that was seized in the second government seizure for fraud and money laundering claims remains frozen, in two banks and 19 mobile money accounts (M-pesa payment receipt numbers), as the matter is before the high court of Kenya.
The $3 million seizure of funds occurred in late August last year, less than two months after the Kenyan court froze $52.5 million from Flutterwave and other entities, including Elivalat Fintech, Boxtrip travel and tours, Bagtrip travels, Hupesi Solutions, Cruz Ride Auto Ltd and Adguru.
With each seizure, the country’s Asset Recovery Agency (ARA), a state agency tasked with tracing the proceeds of crime, filed a lawsuit.
The initial case was closed last week and $52.5 million was released, after the ARA formally dropped the case. However, the second case continues, where the solutions of Flutterwave, Adguru and Hupesi are the defendants. The judge of the National Court Esther Maina set yesterday the next mention for March 23.
While some parties predict the case is unlikely to reach a full hearing, Flutterwave remains unsettled by the courts, delaying its chances of obtaining a license to operate in Kenya.
what has happened so far
Funds released after ffirst case closes but flutterwave is still frozen
The court released the funds belonging to Flutterwave and his co-defendants after the ARA formally withdrew a forfeiture request against all of them on February 27 of this year, ending the first case.
However, TechCrunch is aware of reports that although the Kenyan court released the funds after the initial case closed, the fintech had still not accessed the funds on Friday; however, some parties in the case had accessed their funds. It was not immediately clear why the fintech was unable to access its funds, and efforts to obtain comment from Flutterwave on this were unsuccessful.
The release of the funds came after a Kenyan court in early February dismissed an application by 2,468 Nigerians seeking to have part of the frozen funds set aside in case the money was seized from the government. The individuals sought to recover funds they had “invested” and lost through a sports betting platform, which they claim was a bogus investing and trading scheme that used Flutterwave to process their payments.
The court dismissed the application on February 9 on the grounds that the ARA had requested to withdraw the forfeiture application in December last year, almost a month after it requested that Boxtrip Travel and Tours and Bagtrip travel be removed from the proceedings.
the genesis
Flutterwave’s troubles in Kenya began in July last year when the ARA accused it of fraud and money laundering, leading to the freezing of millions of dollars in accounts linked to the fintech and its co-defendants.
The agency said Flutterwave’s bank accounts were used as conduits for money laundering under the guise of providing business services, and that the fintech had no evidence to substantiate retail transactions by customers paying for goods and services. He added that no liquidations to the presumed merchants were verified. The agency has petitioned the court to have the money forfeited by the government.
However, a change has been noted after a new government took office late last year, dismissing some high-profile cases, including the one against Flutterwave.
Founded in 2016 by Iyinoluwa Aboyeji, Olugbenga “GB” Agboola (CEO) and Adeleke Adekoya, Flutterwave facilitates cross-border payments in Africa, has a remittance service that allows users to send money to recipients to and from the continent. Its services also include the Flutterwavestore service, an e-commerce platform similar to Shopify, for small businesses.
The fintech, which raised $350 million last year at a $3 billion valuation, making it one of the most valuable startups in Africa, has faced a series of controversies over the past year, including allegations harassment, embezzlement and mismanagement.
