Mobile network operator Safaricom has been sued by BitPesa for intimidating the company to have its services suspended. The alleged reason for the suspension is the lack of licence from the Central Bank of Kenya.

The court hearings take place in Nairobi today, 24 November 2015, as decided by the High Court Judge Joseph Onguto, says local news outlet Daily Nation. BitPesa together with another digital payment company, Lipisha, are suing Safaricom for illicit terminating of their services on 12 November. According to their representatives, Safaricom sent a text message demanding to suspend all the services if the companies could not provide a bitcoin trade licence from the Central Bank of Kenya.

The news came just a few days after the announcement that BitPesa, previously present in Kenya and Tanzania, was expanding to Uganda and Nigeria. BitPesa (“pesa” means “money” in Swahili) is perhaps the most well-known African bitcoin start-up. It runs a bitcoin-powered remittance service instantly delivering money to African mobile phone accounts. Most customers of the company use its services for business needs such as salaries, suppliers or operations. Since September it also runs a 24/7 bitcoin trade platform.

In the UK the company operates under the country's Financial Conduct Authority license, since its original target audience was Kenyan diaspora in Britain wishing to send money back home. However, the suspension of its service by Safaricom may create huge problems for the company. According to its lawyer, Kiragu Kimani, BitPesa faces a risk of bankruptcy because, apart from Safaricom, there are no other available mobile platforms to conduct the business.

Since the suspension of BitPesa’s services by Safaricom, the volume of Kenyan Shillings traded on LocalBitcoins doubled, reaching 3 million KES (approximately US$29,300).

Judge Onguto agreed that a suspension of contract without an advance notice and declared reason is an “urgent case.” CoinFox will monitor the development of the situation.

Alexey Tereshchenko