Cytonn Funds: Trouble has continued to follow investment firm Cytonn. According to a report that appeared in the Standard newspaper on Wednesday, the firm has been sued by an investor who is seeking to recover his money. This, even as Cytonn’s chief executive officer Edwin Dande came out to dismiss claims that Cytonn is operating like a ponzi scheme. “A Ponzi scheme has no underlying assets; we do,” Dande said.
The report in The Standard said last October, Kenneth Kasinga was approached by a Cytonnn representative and presented with an offer he couldn’t refuse. He got a proposal to invest in a product that could return 19 per cent interest annually for just one year.
“Kasinga then invested Sh. 3 million into the Cytonn High Yields Solutions. A year later he has sued the investment firm telling the court that the money was at risk. The investor says that Cytonn “purported” to be offering private offers in order to remove themselves from CMA regulation, but their offer was public and requires approval from CMA,” the report said.
Apparently, Kasinga had been told that the investment was a private placement with not more than 100 investors, but Cytonn had raised money from 3,000 investors. He now wants a declaration that the CHYS is a public offer subject to regulation and approval of CMA. He also wants it audited.
“The investor wants a permanent injunction preventing Cytonn from extending the maturity date of his investment. He says Cytonn unilaterally gave him the option of extending his investment by 12 months after the date of maturity or enter an agreement for an additional two years after the date of maturity, a decision he had to make within 30 days,” the report on the Cytonn funds said.
It further reported that Cytonn said “the CHYS and the Cytonn Real Estate Project Notes (CPN) had been impacted by the virus causing reduction of labour force translating to longer development periods, slowdown in building approvals as well as in collections from those who’ve purchased off-plan real estate on installment plans. One of its products, Cytonn Cash Management Solution lost over Sh. 50 million in collapsed supermarket Nakumatt. It was part of commercial paper holders owed Sh. 4 billion who went home with nothing.”