A forex trader based in Nairobi, Michael Gitonga, who faces allegations of defrauding clients of Ksh 215.3 million, is seeking to have the case dismissed in the lower court. During a recent appearance before Magistrate Benmark Ekhubi, it was revealed that the Capital Markets Authority, the complainant in this matter, has an internal investigation department that will handle the issue.
Magistrate Ekhubi instructed the involved parties to submit formal applications as he prepares to issue further directives. Known as Tosh, Gitonga is accused of violating CMA regulations by improperly managing client funds, a practice forbidden for licensed money managers.
Court records indicate that from April 2022 to August 2024, he allegedly misappropriated Ksh 212.16 million for personal use and fraudulently obtained an additional Ksh 3.14 million from three individuals by falsely promising to invest their money.
Under Kenya’s forex trading regulations, money managers are permitted only to oversee client portfolios for a fee and are prohibited from accessing or withdrawing client funds, which Gitonga is accused of violating.
Additional details from the charge sheet show that between April 2023 and April 2024, Gitonga allegedly obtained Ksh 1.3 million from an investment company, Ingotse 95, under false pretenses.
He is also accused of fraudulently acquiring Ksh 1.54 million from Chepkembol Labbat between March and April 2024 and Ksh 300,000 from James Mwaura Mbugua between March 2022 and September 2024, all while claiming the money would be invested in forex trading.
The CMA, which suspended Trade Sense Limited’s licence for 90 days on March 3, cited governance failures, financial non-compliance, and anti-money laundering concerns as reasons for its decision.
The regulator had been engaging the firm over these breaches since 2023, indicating that Gitonga had been on its radar for some time.
Trade Sense Limited required a minimum investment of Ksh 258,380 ($2,000) for retail clients and Ksh 1.2 million ($10,000) for corporate and high-net-worth investors.
The firm also imposed a 90-day lock-in period for the principal investment and charged a three percent management fee, prorated daily.
Kenya’s forex trading market has witnessed a rise in fraudulent schemes as more investors seek to capitalise on the lucrative but high-risk
sector.
CMA has only licensed non-dealing brokers, meaning they do not engage in market-making activities but only provide trading platforms and accounts.
However, some traders have found ways to bypass regulations, resulting in significant investor losses.
The forex market is one of the largest and most liquid in the world, with daily transactions exceeding $7.5 trillion.
Kenya has seen a surge in participation from tech-savvy investors but the risks associated with unregulated forex trading prompted the CMA to introduce the Online Foreign Exchange Trading Regulations in 2017 to safeguard investors.
The CMA has warned against fraudulent traders who lure investors with promises of high, unrealistic returns.
Gitonga’s case now serves as a major test for enforcement in the sector, with regulators keen to clamp down on violators.
CMA will use the 90-day suspension period to review whether to lift or extend Trade Sense Limited’s suspension or to take further regulatory action.
