Flutterwave, a Nigerian betting company, had its accounts frozen in Kenya following a court order. Justice A. Mabeya of the Nairobi High Court imposed a 14-day lien on 45 Flutterwave bank accounts and 10 mobile money accounts. The freezing of accounts was a result of a petition filed by Morris Ebitimi Joseph on behalf of 2,468 investors who were defrauded by 86 Football Technology Ltd (86FB, 86W, and 86Z), a fraudulent sports betting company operating as a Ponzi scheme. The investors alleged that Flutterwave and 86FB conspired to cheat them out of $12.04 million.
Flutterwave responded to TechCabal, stating that while some accounts had been frozen, it was a standard procedure in civil cases. The company clarified that it had previously identified unauthorized companies using their platform for processing payments related to 86FB, prompting them to inform the merchants and suspend their use of Flutterwave. They also reported the matter to law enforcement authorities in Nigeria and assured compliance with the legal process in Kenya.
In 2022, 86FB accused Flutterwave of maliciously freezing its accounts and attempting to seize the funds for themselves, alleging collusion with local police. Flutterwave denied the claims, stating that 86FB was not registered or approved by them. During their investigation, Flutterwave discovered direct merchants processing transactions for 86FB without authorization, leading to their suspension from the platform.
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Payment processors and Ponzi schemes
This incident is not the first time Flutterwave has taken action against Ponzi schemes using its platform. In 2020, Flutterwave, along with Paystack, restricted Racksterly (another Ponzi scheme) from processing payments. The CEO of Flutterwave, Olugbenga Agboola, explained that the restriction was implemented to protect customers from fraud. Flutterwave refunded all transactions conducted by Racksterly subscribers in January 2020.
An initial trial and a Success
Previously, the aggrieved investors of 86FB had attempted to sue Flutterwave in Kenya to prevent the transfer or withdrawal of funds held in several bank accounts and mobile money accounts. However, Flutterwave was cleared of any wrongdoing, and the investors lost their bid to access the frozen funds. With this new court case, the 86FB investors have obtained a lien on Flutterwave’s accounts, potentially allowing them to recover their losses. The parties will reconvene with Justice A. Mabeya after the expiration of the 14-day lien for further directions on the case, including a decision on whether to extend the freezing orders.
Conclusion
In response to the situation, Flutterwave has also filed criminal defamation charges against 86FB. Additionally, Flutterwave is pursuing a payment license in Kenya.
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