Bitcoin fraud suspect denied bail in Zimbabwe

Lloyd Chiyangwa, a cryptocurrency dealer in Zimbabwe, who allegedly stole $457,000 worth of cryptocurrency from accounts belonging to an eye specialist, has been denied bail.  

Quick facts  

• Chiyangwa, who is charged with theft and money laundering, was denied bail by Harare regional magistrate, Marehwanazvo Gofa, per a report by The Herald.  
• According to her, if granted bail, there were high chances that Chiyangwa would continue to defraud more people. The state also opposed the bail on grounds that the suspect had two passports and two South African bank accounts and was likely to escape to South Africa.  

Theft details  

• The complainant, who is an eye specialist, bought cryptocurrencies in June 2020 while in India, from a company in the United Kingdom. Upon his return to Zimbabwe in 2021, he contacted Chiyangwa to set up bitcoin wallets to sell and exchange his bitcoins.  
• Chiyangwa set up five accounts for the complainant, including two cold storage accounts. During the set-up process, he had access to the passwords of all wallets.  
• Chiyangwa allegedly stole tokens from different wallets of the complainant between October 2021 and March this year and transferred them to his own wallet.  
• This was done in batches of $261,500, $49,950, $98,915, $7,800, $7,268, $30,874, and $5,155, giving a total of $457,468. 
• The matter became known in May after the complainant discovered that Chiyangwa had transferred all the tokens out of his account. Chiyangwa used part of the proceeds to acquire 2 iPhones, a laptop, a Mercedes Benz and other items.  

What’s new?

• On Friday, July 7, the suspect was granted bail of $500 by a Harare magistrate, and was ordered to surrender his travel documents as part of his bail conditions.

Zoom out  

• In 2018, Zimbabwe banned financial institutions from crypto trading and experts claim this prohibition has inadvertently facilitated an increase in scams. 
• In February 2021, the Reserve Bank of Zimbabwe introduced a policy to support innovations in the financial sector. However, crypto and digital currencies were listed as ineligible for innovation. 
• Kumbulani Shirichena, head of communications at the Reserve Bank of Zimbabwe, explained that they were excluded because “crypto assets and digital currencies are novel innovations in the world of finance whose risks to the financial system are not yet fully known.” 
• He added that the bank has adopted a “cautious approach” to “study and understand crypto assets and digital currency,” and that scams and fraud “should be dealt with separately by the necessary legislation.” 
• Despite the restrictions, Zimbabweans still trade cryptocurrencies.  

Editor’s note: This story was updated to include new information on the suspect's bail conditions.