Flutterwave’s troubles in Kenya are not yet over as the second case continues

Image credit: Flutter wave

Africa’s most valuable unicorn Flutterwave is still not off the hook in Kenya. About $3 million of the money confiscated in the second state seizure over money laundering and fraud claims remains frozen, in two banks, and 19 mobile money accounts (M-pesa payroll numbers), as the case is before Kenya’s High Court.

The $3 million seizure occurred in late August last year, less than two months after a Kenyan court froze $52.5 million from Flutterwave and other entities including Elivalat Fintech, Boxtrip Travel and Tours, Bagtrip Travel, Hupesi Solutions , Cruz Ride Auto Ltd and Adguru.

With each seizure, the country’s Assets Recovery Agency (ARA), a government agency tasked with tracking the proceeds of crime, filed a case.

The first case was closed last week and $52.5 million released, after the ARA formally withdrew the case. However, the second case, in which Flutterwave, Adguru and Hupesi solutions are the respondents, continues. High Court judge Esther Maina yesterday set the next hearing for March 23.

While some parties predict the case is unlikely to proceed to a full hearing, Flutterwave remains undecided by the court, delaying its chances of obtaining a license to operate in Kenya.

In response to TechCrunch questions regarding its current case, Flutterwave said: “…we are confident that the outstanding case is simply open due to normal legal processes and will also go the way of the previous one as we have been cleared of all misdemeanor.”

“We are excited to put this behind us and work to simplify payments for endless opportunities in one of Africa’s most dynamic markets,” the fintech said.

What has happened so far

Funds released after fthe first case is closed but Flutterwave is still frozen

The court released the funds belonging to Flutterwave and its co-defendants after the ARA formally withdrew a confiscation application against all of them on February 27 this year, closing the first case.

However, TechCrunch is aware of information that although the Kenyan court released the funds after the conclusion of the initial case, the fintech still did not have access to the funds by Friday – but some parties to the case had accessed their funds. It was not immediately clear why the fintech could not access its funds. Flutterwave told TechCrunch that it is “working through the process to have access to all funds.”

The release of the funds came after the Kenyan court earlier in February threw out an application by 2,468 Nigerians who sought to have part of the frozen funds released in case the money was lost to the authorities. The individuals sought to recover 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 their payments.

The court rejected the application on February 9 on the grounds that ARA had applied to withdraw the confiscation application in December last year, almost a month after it applied to have Boxtrip Travel and Tours, and Bagtrip travels removed from the proceedings.

The origin

Flutterwave’s troubles in Kenya started last July when it was accused by the ARA 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 offering merchant services, and that the fintech did not have evidence to verify retail transactions from customers paying for goods and services. It added that there was no evidence of settlement with the alleged merchants. The agency has petitioned the court to have the money forfeited to the authorities.

However, a turnaround has been noted after a new government took office late last year, dropping some high-profile cases, including the one against Flutterwave.

Flutterwave was founded in 2016 by Iyinoluwa Aboyeji, Olugbenga “GB” Agboola (CEO) and Adeleke Adekoya. Flutterwave facilitates cross-border payments in Africa, and has a remittance service that allows users to send money to recipients to and from the continent. The services also include the Flutterwavestore service, 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 the most valuable startups in Africa, has faced a number of controversies over the past year, including allegations of harassment, misappropriation of funds and bad management.

Updated to include Flutterwave’s response.