In a suit at filed the High Court in Nakuru, Kenneth Maweu Kasinga, through Konosi and Company Advocates, has sued Cytonn Investments over his unpaid investment dues.
In his affidavit, the plaintiff argues that Cytonn failed to honor the investment agreement that stated that he was to be made a partner and that Cytonn would process payments for his investments within three working days upon his investment’s maturity.
The plaintiff also stated that Cytonn changed his contract from a public to a private offer to escape scrutiny from the Capital Markets Authority (CMA).
The suit’s crux stemmed from what Mr. Kasinga may describe as a follow-through tactic deployed by Cytonn Investments.
From the court documents, the plaintiff stated that on October 8, 2019, he invested Ksh 3 million in the Cytonn High Yield Solutions (CHYS)– a product offered by Cytonn investments. According to Mr. Kasinga, the principal sum that he invested in the CHYS would attract an interest of 19% per annum until its maturity that was tentatively confirmed to be on September 7, 2020.
However, on June 22, 2020, Cytonn informed Mr. Kasinga that he had two options pending to maturity of his investments. The first option was that he would need to extend his investment by 12 months after the date of maturity, whereas the second option was that he would need to enter into a standstill agreement where Cytonn would extend his funds for an additional two years after the date of maturity. These options were to be chosen within 30 days.
Before the expiration of the ultimatum, on June 30, 2020, Cytonn unilaterally extended the maturity of Mr. Kasinga’s investment for a further 12 months. Additionally, Cytonn also reduced the periodic interest payable by half and increased the length of days of processing payments upon maturity from 3 days to 5-10 days. Furthermore, the remaining half was to capitalize on his principal investment.
On July 2, 2020, Mr. Kasinga wrote a complaint letter to Cytonn opposing the unilateral decisions, including extending his investment past the stipulated 12-month timeline.
Nonetheless, Cytonn issued Mr. Kasinga with a response stating that it could not seek 3,000 other investors’ views on payment of investments upon maturity; hence, the decision stood.
It is against this background that Mr. Kasinga sued Cytonn Investment.
Also enlisted in the suit as defendants are the Capital Markets Authority. Late last week CMA raised a red flag over Cytonn’s ability to pay back his investors citing that investors risked losing their hard earned cash.
On the contrary, Cytonn investment challenges CMA’s opinion. According to the firm, CHYS has not made a return on investment due to the Covid-19 pandemic that has affected the real estate sector. Accordingly, buyers of Cytonn real estate are yet to pay up to Ksh 1.6 billion hence the delay.
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