Kenya has witnessed a significant surge in cryptocurrency adoption, positioning itself as a leader in crypto investments in Africa. However, this rapid growth has been accompanied by a proliferation of crypto scams in Kenya, exploiting the enthusiasm and, at times, the naivety of investors.
To combat these fraudulent activities, the Kenyan government introduced the Virtual Asset Service Providers (VASP) Bill, 2025, aiming to regulate the crypto space and protect its citizens.
This article aims to shed a light on the different crypto scams to which Kenyans are falling victim in 2025 and take a look at the VASP Bill. At the end of it, you should be able to spot examples of scams and the telltale signs of one.
Crypto Scams in Kenya
Crypto Mining Scams
Fraudsters lure investors by promising high returns from cryptocurrency mining operations. Victims are persuaded to invest in mining equipment or join mining pools, only to discover that the operations are nonexistent or unprofitable.
Victims might also be promted to install applications on their phones. The applications are filled with adware, which generates ad income to the creators but no apparent value addition to the victim.
Trading Bots Scams
Most of the crypto traders in Kenya always advertise things called “bots” on their social media platforms. They will show screen recordings of them making hundreds of dollars in minutes from very low investments.
From a crypto expert, this is all a facade. But to the untrained eye eyeing quick profits, they see this as the perfect way to make money, not knowing they are about to fall victim to a scam.
So, what is a trading bot?
A trading robot is a piece of software that analyzes the crypto markets and then helps the trader decide if to buy or sell a crypto asset. These bots are usually automated and integrated into the trading platforms. In Kenya, deriv traders are usually the ones parading their trading bots. Scammers offer automated trading bots claiming to generate substantial profits by executing trades on behalf of investors.
Can I make money with a trading bot?
Legitimate trading bots exist. But their money-making capabilities are short-term. Remember, the crypto market is extremely volatile, and prices can change significantly, rendering the bot’s analysis useless. These bots will then employ dubious strategies, leading to significant financial losses for users.
Some of the bots being sold by these crypto traders can also be found freely on the internet. They will just download them, make a few tweaks, and sell as their own.
Peer-to-Peer (P2P) Scams:
P2P trading is used to facilitate the transfer of assets between two traders. This is usually the quickest and cheapest transfer method. On P2P platforms, individuals buy and sell cryptocurrencies directly from each other.
Scammers exploit this by posing as legitimate traders, tricking users into paying for cryptocurrencies they never receive, or selling assets without receiving payment.
Binance, being the most common crypto platform in Kenya, is the most affected by this scam. This has prompted sellers to reject payments from some payment providers, which might be an inconvenience to other legitimate traders.
Pump-and-Dump Schemes
This is one of the newest crypto scams in Kenya. Organizers artificially inflate the price of a cryptocurrency through misleading statements, prompting unwary investors to buy in. Once the price peaks, the organizers sell off their holdings, causing the price to plummet and leaving other investors with significant losses.
DCI Kenya and KBC fell victim to when their X accounts (formerly Twitter) were hacked by these crypto scammers and dubious crypto coins were launched on these apps. On a global scale, the most commonly known pump and dump scheme is the Hawk Tuah girl coin.
How To Identify Cryptocurrency Scams
When it comes to identifying cryptocurrency scams, several telltale signs should immediately raise red flags for potential investors.
Major warning signs include:
• Requirements to recruit new investors or pyramid-style reward structures for bringing in participants
• Promises of guaranteed returns or unusually high profits—legitimate cryptocurrency investments never guarantee returns due to market volatility.
• High-pressure tactics push for immediate investment decisions using phrases like “limited time offer” or “exclusive opportunity.”
• Fake celebrity endorsements or impersonation of well-known crypto figures on social media platforms. This is a big challenge, especially with the rise of AI and deepfakes.
• Lack of transparency regarding:
– Project team members and their credentials
– Clear whitepaper or documentation
– Specific use case for the cryptocurrency
– Company registration and physical address
• Technical and communication red flags:
– Poorly designed or unprofessional websites
– Grammatical errors in official communications
– Communication only through unofficial channels like Telegram or WhatsApp
– Difficulties withdrawing funds
– Constant demands for increasing investments
• Platform issues:
– No clear terms and conditions
– Missing privacy policy
– Unverified security protocols
– Absence of regulatory compliance information
Remember that legitimate cryptocurrency investments will always have verifiable team members, clear tokenomics, transparent communication channels, and won’t pressure you into making rushed investment decisions.
When dealing with peer-to-peer crypto trade on most platforms, watch out for traders who insist on communicating outside the official application channels. Most of these end up being scammers. Trust your instincts and immediately initiate conflict resolution measures to prevent loss of assets, and make sure the scammers are banned from the respective applications.
The VASP Bill, 2025: A Move To Regulate Crypto In Kenya.
The VASP Bill 2025 seeks to establish a comprehensive regulatory framework for virtual asset service providers in Kenya. Key provisions of the bill include:
- Registration and Licensing: All virtual asset service providers must register with the relevant authorities, ensuring they meet specific operational and financial standards. This will effectively barr individuals from launching initial coin offerings (ICOs) on their own. This requirement for corporate registration, along with mandated disclosure of company ownership under the Companies (Beneficial Ownership Information) Regulations, 2020, will make it easier to trace and hold those responsible for market manipulation accountable.
- Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Measures: The government’s claim is that the crypto world is used by the population to evade taxes, fund terror activities, and launder money. VASPs are therefore required to implement robust AML and CTF protocols to detect and prevent illicit activities.
- Consumer Protection: The bill mandates transparency in operations, obligating VASPs to provide clear information about their services, fees, and associated risks to consumers.
- Monitoring and Reporting: Regular audits and reporting are enforced to ensure compliance and to identify any suspicious activities promptly.
By enforcing these measures, the VASP Bill aims to deter fraudulent schemes, such as pump-and-dump operations, by holding service providers accountable and ensuring they operate transparently and ethically.
Limitations Of The VASP Bill, 2025
While the VASP Bill represents a significant step forward, challenges persist. The decentralized nature of cryptocurrencies makes it difficult to monitor all transactions and identify perpetrators of scams. The bill also focuses on crypto coins registered and operating in Kenya. However, most crypto scam coins are launched on a global scale. Hence, international collaboration is crucial if the bill aims to protect Kenyans at large.
The VASP Bill lacks incentives or protections for whistleblowers, which could slow down the early detection and reporting of suspicious activities. Additionally, it does not specify the required content for a digital asset white paper or outline necessary disclosures for ICOs. Future revisions of the bill will probably handle most of its shortcomings.
Additionally, public awareness remains a critical issue; many investors are not fully informed about the potential risks associated with digital assets. The CBK has issued public notice in the past warning Kenyans of the dangers, but crypto growth has grown steadily regardless.
Is cryptocurrency legal in Kenya?
Crypto in Kenya operates in an unregulated space and therefore cannot be considered illegal. However, the VASP bill of 2025 aims to bring some regulations in the crypto space.
How can I buy crypto in Kenya?
You can buy cryptocurrencies in Kenya through exchanges like Binance and Bybit. Several payment methods are also accepted during purchase, such as credit card and even M-Pesa through P2P.
How do I prevent crypto scams in Kenya?
Proper education and awareness. Most people who fall victim to crypto scams don’t have proper knowledge or exposure to the world of cryptocurrencies. Before jumping into the train out of excitement, take time to read the basics of crypto and if you want to trade crypto, learn it professionally.There is no shortcut and a quick way to make money through crypto.
Always deal with verified platforms. Sounds easy until you have fallen victim and there is no one to hold accountable, and no trace to follow. Always check for online reviews and do proper research.
The basic of all measures is to always trust your insticts. If something feels wrong, it definitely is wrong. Run while you still have the chance.
Conclusion
Crypto scams in Kenya and the world at large are changing. It is important for you as a crypto enthusiast to equip yourself with the latest information. As a beginner, enroll yourself in reputable crypto trading academies that give real-world insights on the dangers of the crypto space and always trade what you are willing to lose.
The VASP Bill, 2025, on the other hand, signifies Kenya’s commitment to fostering a secure and transparent cryptocurrency environment. By implementing stringent regulations and promoting investor education, the government aims to curb the rise of crypto scams and protect its citizens from financial exploitation.