Flutterwave, Africa’s most valuable unicorn, is still being hunted in Kenya. As the matter is before Kenya’s high court, about $3 million of its money that was confiscated in the second government seizure over money laundering and fraud claims remains frozen in two banks and 19 mobile money accounts (M-pesa paybill numbers).
The $3 million funds seizure occurred late last year, less than two months after a Kenyan court froze $52.5 million from Flutterwave and other entities such as Elivalat Fintech, Boxtrip travel and tours, Bagtrip travels, Hupesi Solutions, Cruz Ride Auto Ltd, and Adguru.
The country’s Assets Recovery Agency (ARA), a state agency tasked with tracing criminal proceeds, filed a suit with each seizure.
After the ARA formally withdrew the case, the initial case was closed last week and $52.5 million was released. However, the second case, in which Flutterwave, Adguru, and Hupesi solutions are the respondents, continues. The next hearing date was set for March 23 by High Court Judge Esther Maina yesterday.
While some parties predict that the case will not proceed to a full hearing, Flutterwave’s prospects for obtaining a licence to operate in Kenya remain uncertain.
In response to TechCrunch’s questions about its current suit, Flutterwave stated, “…we’re confident the outstanding suit is simply open due to normal court processes and will also go the way of the previous one as we’ve been cleared of all wrongdoing.”
“We’re excited to put this behind us and focus on simplifying payments for limitless possibilities in one of Africa’s most dynamic markets,” the fintech said.
What has occurred thus far
Funds are released after the first case is resolved, but Flutterwave remains frozen.
After the ARA formally withdrew a forfeiture application against all of them on February 27 of this year, the court released the funds belonging to Flutterwave and its co-accused.
According to TechCrunch, although the Kenyan court released the funds following the conclusion of the initial case, the fintech had yet to access the funds by Friday — despite the fact that some parties in the case had accessed their funds. It was unclear why the fintech was unable to access its funds. According to TechCrunch, Flutterwave is “working through the process to have access to all funds.”
The funds were released after a Kenyan court rejected an application by 2,468 Nigerians seeking to have a portion of the frozen funds separated in the event that the money was forfeited to the government earlier in February. The individuals attempted to recoup funds they had ‘invested’ and lost through a sports betting platform, which they claim was a fraudulent investment and trading scheme that used Flutterwave to process payments.
On February 9, the court dismissed the application on the grounds that the ARA had filed to withdraw the forfeiture application in December of last year, nearly a month after it had applied to have Boxtrip Travel and Tours and Bagtrip Travels removed from the proceedings.
Flutterwave’s problems in Kenya began in July of last year when it was accused by the ARA of fraud and money laundering, resulting in the freezing of millions of dollars in accounts associated with the fintech and its co-accused.
Flutterwave’s bank accounts were used as conduits for money laundering under the guise of providing merchant services, according to the agency, and the fintech had no evidence to corroborate retail transactions from customers paying for goods and services. It went on to say that there was no proof of settlements with the alleged merchants. The agency has asked the court to order that the money be forfeited to the government.
However, since a new government took office late last year, some high-profile cases, including the one against the Flutterwave, have been dropped.
Flutterwave, which was founded in 2016 by Iyinoluwa Aboyeji, Olugbenga “GB” Agboola (CEO), and Adeleke Adekoya, facilitates cross-border payments in Africa and has a remittance service that allows users to send money to and from the continent. It also offers Flutterwavestore, a Shopify-like e-commerce platform for small businesses.
The fintech, which raised $350 million last year at a $3 billion valuation, making it one of Africa’s most valuable startups, has been embroiled in a series of controversies in the last year, including allegations of harassment, misappropriation of funds, and mismanagement.