Windhoek crypto scheme operator loses court bid to unfreeze bank accounts

A windhoek resident who ran a cryptocurrency investment scheme, that was closed down by the Bank of Namibia, has failed with an attempt to regain access to his frozen bank accounts.

A claim in which investment scheme operator Ruaan Smith asked the Windhoek High Court to unfreeze his bank accounts was dismissed by judge Eileen Rakow on Friday.

Rakow ordered Smith to pay the legal costs of the Bank of Namibia (BoN) and BoN official Romeo Nel in the matter.

She concluded that the central bank’s board of directors correctly decided in November 2021 to authorise Nel to investigate Smith’s bank accounts.

Rakow also concluded that Nel had the power to have Smith’s accounts frozen in terms of a section of the Banking Institutions Act of 1998.

The court was informed that the BoN’s banking supervision department received a suspicious transaction report in relation to Smith’s bank accounts in May 2021.

Smith was running a cryptocurrency investment scheme under the name Retribuet Statera Private Investment Club at that stage.

After the department assessed Smith’s accounts, it concluded that he was possibly contravening a section of the Banking Institutions Act by conducting banking business without being authorised to do so.

The findings on Smith’s accounts were presented to the BoN’s board of directors in November 2021, and the board then authorised Nel to investigate the accounts.

In January 2022, Nel instructed Nedbank Namibia to summarily freeze four accounts of Smith, while Standard Bank Namibia was also instructed to freeze four accounts of Smith.

After further investigations and concluding there was no record of suspicious transactions having been conducted through those accounts, Nel had the Standard Bank accounts unfrozen.

Nel informed the court it was found that N$35.9 million had been paid into one of Smith’s Nedbank accounts during the period from March 2015 to February 2022.

A total amount of N$35.9 million was also paid out or withdrawn from the same account over the same period, mostly to two other accounts in Smith’s name.

A total amount of N$9.6 million was paid into another Nedbank account of Smith, while about N$9 million was withdrawn from that account during the period from November 2019 to June 2021, the court was also informed.

Another account at Nedbank showed payments of N$6.1 million into the account from August 2021, when it was opened, to the end of January 2022.

The balance on that account was N$3.7 million when it was frozen.

According to Smith, he was operating an investment club, named Retribuet Statera Private Investment Club, in which the pooled funds of members were used to buy and sell virtual assets at marginal profits through foreign cryptocurrency exchanges, Rakow recounted in her judgement.

Smith also told the court he used a self-developed algorithm to determine opportunities to buy cryptocurrencies and sell it at a marginal profit.

He claimed the business he conducted was not banking business and was not regulated by BoN.

Rakow noted that in terms of the Banking Institutions Act, the Bank of Namibia may, if it has reason to believe that a person is conducting banking business in contravention of the act, instruct a bank to summarily freeze the bank accounts of such a person.

The term ‘reason to believe’ does not require explicit proof or even proof on a balance of probabilities, but only requires a reason to believe, Rakow said before concluding that the central bank’s board correctly decided to authorise Nel to investigate Smith’s accounts.

Smith was arrested and charged with a count of fraud and two charges under the Prevention of Organised Crime Act in August 2024.

After spending more than two months in custody, he was granted bail in an amount of N$150 000 in the Windhoek Magistrate’s Court in October 2024.

Smith’s criminal case was struck off the court roll at the start of August last year, because a decision from the prosecutor general on the further course his prosecution was to take was not yet available.

Smith was represented by lawyers James Diedericks and Julian Comalie in his case against BoN and Nel.

The bank and Nel were represented by Ramon Maasdorp and Ndinelao Kamati.

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