Kenya’s Court of Appeal has unanimously dismissed every remaining challenge by Cytonn Investments, sealing the fate of two collapsed investment schemes that swallowed more than
KSh 11 billion from over 3,000 ordinary savers. The rulings, delivered across a dozen appeal files, confirm that money raised through the Cytonn High Yield Solutions and Cytonn Project Notes was funnelled into a web of unregulated companies controlled by the same individuals who promised sky-high returns.
Judges upheld the High Court finding that dozens of special purpose vehicles created by Cytonn were not independent entities but mere extensions of the parent company.
Investor funds were lent onward without security, without proper governance and without oversight from the Capital Markets Authority. When the High Court had described the structure as “akin to fraud”, Cytonn seized on the phrase to argue defamation and criminal implication.
The appeal court clarified that the remark was a civil characterisation of reckless and deceptive practices, not a criminal conviction, allowing liquidation to proceed swiftly.
The decision aligns with a 2023 parliamentary investigation that exposed how Cytonn built an empire of almost seventy entities between 2015 and 2020 while evading all capital-markets regulation.
Teachers, civil servants and pensioners were lured by glossy brochures promising returns far above Treasury bills, only to discover their savings had vanished into unfinished apartments and unsecured loans to related parties.
Major real estate projects financed by the schemes, including The Alma in Ruaka, RiverRun Estates in Ruiru and The Ridge in Ridgeways, now fall under the control of the Official Receiver.
Valuations show some properties are worth considerably more than the money invested, but secured bank lenders with registered charges will be paid first, leaving retail investors at the back of a long queue.
The Capital Markets Authority had warned the public in June 2021 that both products were unregulated and under criminal investigation, a warning Cytonn dismissed while continuing to accept deposits.
Legal experts say the case reveals dangerous gaps that allow firms to market collective investment schemes to the public while claiming they are “private offers” exempt from supervision.
For thousands of Kenyans still waiting for any repayment four years after the collapse, the rulings bring finality but little immediate relief.
The liquidator must now decide whether to complete half-built blocks or sell them at distress prices in an oversupplied market. Recovery, if it comes, will be measured in years rather than months.
The Cytonn saga stands as Kenya’s largest financial scandal involving retail investors. It is a stark reminder that high returns come with high risks, and that regulatory loopholes can be as costly as any fraud.
Lawmakers and regulators have been handed a clear mandate: close the gaps before the next promoter arrives with the next irresistible promise.
