Crypto scheme company loses case against Bank of Namibia

The Bank of Namibia had reason to believe the company CBI Exchange Namibia, which was involved in a multimillion-dollar cryptocurrency investment scheme, did not comply with the Banking Institutions Act before the central bank had the company’s bank account frozen, a High Court judge has found.

The finding was made in a judgement in which judge Esi Schimming-Chase dismissed an application by CBI Exchange Namibia to have the Bank of Namibia’s decision to freeze the company’s bank account reviewed and set aside.

The central bank instructed Bank Windhoek in March 2022 to freeze CBI Exchange Namibia’s account.

According to the Bank of Namibia (BoN), that step was taken after it investigated the business conducted by the company and transactions on its bank account.

Also according to the central bank, the investigation gave it reason to believe CBI Exchange Namibia, which described itself as providing a cryptocurrency exchange for investors, was contravening the Banking Institutions Act of 1998 by conducting a banking business and receiving, accepting or taking deposits without being authorised to do so.

CBI Exchange Namibia, represented by its sole director, Coenraad ‘Coenie’ Botha, sued BoN after the freezing of its bank account.

Botha, who is currently facing criminal charges in the Windhoek Magistrate’s Court in connection with his company’s activities, claimed there were no facts on which to form a reasonable belief that CBI Exchange Namibia was contravening the Banking Institutions Act.

In her judgement, delivered on Thursday last week, Schimming-Chase noted that BoN’s investigation of CBI Exchange Namibia’s bank account showed deposits totalling more than N$162.8 million were made into the company’s account from August 2021 to February 2022.

The bank’s investigation also showed that when Botha’s own bank account, had a low balance, money was transferred to it from accounts including those of CBI Exchange Namibia and a related company, CBI X SA, which is registered in South Africa.

According to the Bank of Namibia, debits, payments and withdrawals made from CBI Exchange Namibia’s account from August 2021 to February 2022 amounted to about N$153.6 million, and included total payments of about N$779 000 to one CBN Botha – Botha’s initials and surname.

The central bank also informed the court its analysis of transactions on the company’s bank account revealed several loans ostensibly made to Botha, and that no funds were being paid back by Botha.

Schimming-Chase noted that the company informed the central bank it was selling cyptocurrency in Namibia and did not collect funds or take deposits from the public. However, “this is exactly what happened in [CBI Exchange Namibia’s] accounts”, the judge remarked.

She said the facts set out by the Bank of Namibia showed it had made “a considered assessment” of CBI Exchange Namibia.

Schimming-Chase also said, in her opinion, there were sufficient facts to give BoN reason to believe CBI Exchange Namibia was not complying with the Banking Institutions Act before a notice to freeze its account was issued to Bank Windhoek, and that the central bank did not exceed the mandate given to it by the law when it took that step.

Botha and his wife, Charlotte Murove, are facing 64 charges, including a count of fraud allegedly involving a total amount of N$163 million and a count of conducting a Ponzi scheme, which is a contravention of the Banking Institutions Act, in a case that is pending in the Windhoek Magistrate’s Court.

They denied guilt on all of the charges during a court appearance in January, and are due to appear in court again on 30 April.