Kenya’s recent enactment of the Virtual Asset Service Providers (VASP) Bill into Law marks a milestone in regulating the crypto industry. The law imposes clear obligations on Virtual Asset Service Providers (Exchanges, Custodians, Brokers, Investment Advisors, Initial Coin offering providers), including licensing, capital requirements, cybersecurity, AML/CFT compliance and consumer protection, with regulatory oversight from the CBK and CMA.
However, while CBK & CMA aims to protect consumers by licensing and overseeing service providers, it cannot fully eliminate the wave of scams flourishing on social media platforms like Telegram, WhatsApp, TikTok, Twitter/X, and Instagram.
The Psychology Behind Crypto Scams
Scammers and Influencers prey on human psychology, exploiting greed and the fear of missing out (FOMO), to lure victims with false promises of quick, guaranteed returns. In addition, buzzwords such as “CBK licensed” or “CMA regulated” will be frequently misused to create a false confidence and to persuade people to invest, often without verifying the legitimacy.
Key Social Media Cryptocurrency Scams to Watch Out for:
- Cryptocurrency-based Ponzi Scheme: Aggressively advertised on WhatsApp or Telegram groups promising high, risk-free returns.
- Cryptocurrency-based Job scams: Scammers posing as legitimate company employees lure victims through social media posts or text messages offering fake part-time jobs and assigning fake click-based tasks through scam websites.
- Pump and dump schemes: Scammers use social media to artificially hype up a low-value cryptocurrency, spreading false claims to drive up its price and later sell causing the price to crash.
- Impersonation Scams: Fraudulent profiles mimicking exchanges, regulators like CBK or CMA, or industry influencers to gain trust and steal funds.
- Fraudulent Celebrity Endorsements: Deepfake videos/ audio using AI, fake testimonials, or paid influencers on Instagram, TikTok, or Facebook promoting fake ICOs and Coins.
- Phishing links: post pushing a link via DMs to “claim tokens”, verify an account” or “fake transactional approval prompts”, once link is clicked the scammer steals the cryptocurrency.
- Pig butchering scams (also known as Romance scams): a long-term investment scam, often involving cryptocurrency, where scammers “fatten up” the victim (“the pig”) with trust and affection before “butchering” them, i.e. stealing a large amount of money.
According to Chainalysis (Blockchain Analytical firm), approximately $9.9billion was lost to crypto scams globally in the year 2024. In addition, recent reports from Kenya and Nigeria, an estimated amount of $840million was lost by investors, through Crypto Bridge Exchange(CBEX), which advertised itself as a “crypto-powered trading platform backed by artificial intelligence, promising tantalizing returns of up to 100% in just 30 days”, and required only a simple sign-up through a website or app, often shared via WhatsApp or Telegram by trusted friends” (Source: Chainalysis.com , Kenyanwallstreet.com)
While the VASP Act strengthens oversight of Virtual Asset Service Providers, it does not extend to the informal and fast-moving world of social media where scams thrive. Regulations is critical foundation, but effective protection requires a layered approach, combining consumer education, and expert advice.
At RISKHOUSE INTERNATIONAL, we help our clients navigate Kenya’s evolving crypto landscape with confidence. Our tailored services include risk assessments, scam awareness training, Blockchain forensics, and regulatory crypto compliance. We boast of a team of expert investigators who integrate fraud and risk management, regulatory compliance, blockchain forensics, and legal advisory to build frameworks that reflect both the regulator’s expectations and market realities. Partner with RISKHOUSE INTERNATIONAL, to assess your readiness, identify exposure, and build crypto compliance systems that work in practice to stay competitive in Kenya’s Crypto regulatory landscape.