Cytonn Investment Under Seige – Ponzi or Great Investment?
Cytonn Investments has failed to meet its contractual obligations with investors and further warns that the risk of default has started crystalizing and continued investment in Cytonn’s CHYS and its real estate notes is likely to expose more investors the risk of their investments.
This is according to the Capital Markets Authority (CMA) of Kenya.
Cytonn Investment which was founded by Edwin Dande, Patricia Wanjama, Elizabeth Nkuku and Shiv Arora has been in the news ever since they left Britam in dodgey circumstances. They were sued by Britam for “stealing” clients and ideas to form their company.
Such dodgey news became normal. All the while, the company was offering 18% returns on their “investment” portfolios. Many analysts could not figure out how a company could offer such returns without any track record.
Cytonn Blocks Investors from Withdrawing funds
The company has never finished any of their real estate projects yet could offer ponzi like returns to it’s members. In April 2020 the company failed to pay back it’s “investors”.
“Reduced construction activity, closure of lands offices and slowed purchase of real estate units. For extending maturities for this fund 90 days- a period within which it expects its construction sites to reopen,” according to a statement by Mr Edwin H. Dande, CEO Cytonn Investments Management Plc.
Worse was to come for the company when the Capital Markets Authority insisted that the fund must divest from it’s own property deals. Cytonn was borrowing money from investors in the the name of an investment fund and using the same monies to invest in their own property. Something that the CMA frowned upon.
Mr Dande has accused CMA of engaging in an economic crime, terming the order ‘malicious, unreasonable, irregular and illegal,’ that will fold the high-yield fund he started running in December 2019.
“The directive will cripple the operations of the fund, plunge the fund manager and the investment scheme into chaos resulting into unnecessary legal suits due to breach of contract and lead to massive walkout of the unit holders. It will also plunge the fund manager and the scheme into a financial quagmire as the unit holders will require an immediate return of funds,”Mr Dande said in an affidavit.
Investors Sue Cytonn
Investors have filed complaints with the Capital Market Authority (CMA) against investment firm Cytonn for failure to pay Sh122.8 million upon maturity of funds in one of its pools.
#Cytonn “I have tried (to take my money out” and they say the board decided to extended redemption dates by 12 months after already moving mine by 3 months.also had the option of topping up and buying a unit/ not sure which development at current market prices.”
— pkimani (@pkwazua) July 30, 2020
The 13 investors claim Cytonn has delayed payments of between Sh500,000 and Sh25 million, prompting the regulator to petition the courts in the push to bar Cytonn from putting more cash in real estate projects.
The regulator says it is concerned that one of the funds — Cytonn High Yield Solutions (CHYS) — and debt security raised from investors dubbed Cytonn Project Notes pose risks to investing public.
The regulator warns that Cytonn is at risk of defaulting further on investors obligation, which is to pay the securities and interests on maturity.
The problem with these unregulated funds is that they are coated in mystery. No one knows what they really do to earn 18% and over returns. But they are very good at advertising and public relations. We shall continue to inform you more about this company.
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