Ugandan police have seized Samson Lwanga, one of the directors of the alleged cryptocurrency pyramid scheme Dunamiscoins Resources Limited.

As domestic news publication Daily Monitor reported on Dec. 9, the police arrested Samson Lwanga, one of the four directors of Dunamiscoins. The company in question is allegedly a cryptocurrency scam, which involved over 10,000 people and reportedly managed to defraud victims of 10 billion Ugandan shillings ($2.7 million).

Investigation into the case

Patrick Onyango, a spokesperson for the Kampala Metropolitan police, said that the law-enforcement agency submitted a general inquiry file and is still conducting its investigation into the case. Onyango added:

“According to him (Lwanga), they are willing to refund the money, but the problem is that Financial Intelligence Authority froze their accounts. And they cannot access or withdraw any money. We are going to get in touch with Financial Intelligence Authority to prove if what Lwanga is telling us is true on freezing the accounts.”

According to Lwanga, most of the victims deposited sums between 1 million shillings ($271) and 10 million shillings ($2,715). As Cointelegraph previously reported, Dunamiscoins convinced people to join the firm by promising 40% returns on cash investments. The firm was allegedly working with money transfer companies in the city to recruit new people to the scheme.

Cointelegraph reached out to an email address mentioned on Dunamiscoins’ website only to receive a notice that the listed address could not be found.

Dangers of crypto Ponzi schemes

Earlier this year, deputy governor of the Bank of Uganda, Dr. Louis Kaskende, warned the public about the limited protections offered to them when they invest in unregulated cryptocurrencies. In his remarks, Kaskende clarified that the central bank does not have comprehensive oversight of all financial services firms and institutions and that its supervision typically spans commercial banks, credit institutions, foreign exchange bureaus and money remittance service providers.

Crypto pyramid schemes have gained popularity among fraudsters, and sometimes they step over the bounds of only luring potential investors. In mid-October, Glasgow-based Jen McAdam claimed supporters of the alleged OneCoin pyramid scheme are sending her death threats, mainly through Facebook.