Digital currency scams are on the increase as they lure people to invest with the promise of quick, lucrative returns, according to the National Bank of Rwanda.

The most recent cryptocurrency scam in Rwanda according to BNR is fake Initial Coin Offering (ICO), which is a digital currency transaction that is similar to an Initial Public Offering (IPO).

However, the difference according to experts is that IPOs are protected and regulated by financial authorities while ICOs are not and sometimes fraudsters can set up fake online projects and disappear with investors’ funds.

Oddo Yaramba, a technologist and business developer, said digital transactions based on blockchain are growing and they are secure, but they can be misused for fraud just like other Internet-based services.

A search by Rwanda Today found that some of the companies named in the alleged digital scams are based outside the country and operate online, which might complicate the regulator’s ability to regulate their activities in the country.

For instance, Onyx coin is based in Nairobi, Kenya according to its website and operates in Uganda, Tanzania, Cameroon, Rwanda, DR Congo, Congo Brazzaville, Ghana, Nigeria and Zambia.

The company’s website says the company is “Leveraging block chain technology which will open up business in Africa for Africa.”

Onecoin Ltd, another firm that was mentioned by central bank is based in Sofia, Bulgaria, Europe. The company says it operates worldwide through its online platform.

Recently, the Rwanda Investigative Bureau arrested the owner of Supermarkets Global ltd, a local company involved in illegal investment schemes.

RIB said the company was involved in business activity that was different from the one registered.

According to the company’s registration certificate seen by Rwanda Today, Supermarket Global Ltd’s main business activity is “education support.”

Mr Yaramba said cryptocurrency scams are a global phenomenon and the regulator needs to update policies in collaboration with international security organs.

According to RIB, the country lost about Rwf6 billion in 2018 to cybercrime fraud activities.

The common factor for cryptocurrency scams and other investment frauds noted by the central bank is the promise of quick money at a very short time with minimum effort.

According to Cointelegraph, an independent digital resource for blockchain technology, crypto assets, and emerging fintech trends, 80 per cent of ICOs in 2017 were scams, but only 11 per cent of total funds invested in ICOs in 2017 were lost due to fraudulent activities.

The central bank has urged the public to be cautious and work with licenced financial institutions.