Cytonn Investments vs. Digital Content Creator: Curious Legal Battle Over Online Critique

Cytonn Investments sues Mwango Capital and Chris Orwa

Could your large social media following be grounds for a lawsuit against you? Is a YouTuber free to share a personal story? This discussion is brought about from Cytonn Investments taking a YouTuber to court.

Chris Orwa is a Data Scientist, Writer, and podcaster on YouTube. He runs a YouTube Channel dubbed “Orwa’s Digest”. Other than wearing those professional hats, he also has the indelible mark of being a Cytonnaire.

On the 26th of June, Mr. Orwa took to his YouTube channel to lament about his tribulations of being a Cytonnaire.

Who is a Cytonnaire you ask? This is the term Mr. Orwa uses on the YouTube episode to refer to the over 3,000 members of the public who put over Sh11 billion through Cytonn High Yield Solutions (CHYS).

The term also refers to another 886 members of the public who invested more than Sh4 billion as an investment in the Cytonn Real Estate Project Notes (CPN).

In the episode, he laments and alleges the investment of what he terms as ” my hard-earned saving for 6 years, KES 1Millon” was a lost cause. Chris Orwa went on to share the video on his LinkedIn, Medium and Twitter feeds.

Mwango Capital

The Kenyan financial research firm is known to keep the public abreast of financial news via its X (Twitter) platform. After Mr. Orwa had uploaded his video, Mwango Capital found it as relevant financial news and shared it with their audience on X.

Mwango Capital put a link to the YouTube episode and the caption was a quote from Chris Orwa.

Soon after Mwango posted on their X platform, Mr. Edwin Dande, the CEO of Cytonn Investments was quick to reply to the post. Mr. Dande was not amused by Mwango sharing the video on their X handle. He further alluded he would take the matter to court.

The video is defamatory, should come down otherwise we shall take appropriate steps.” Wrote Cytonn’s CEO.

Cytonn Investments Woes

Cytonn is an investment and real estate company founded in 2014. The founding executives were formally executives at BRITAM. The company launched two investment products for its clients.

  • Cytonn High Yield Solutions (CHYS: For short-term investors)
  • Cytonn Project Notes: For medium to long-term investments

The Cytonn High Yield Fund (CHYF) was regulated by the Capital Markets Authority (CMA), while the Cytonn High Yield Solutions (CHYS), was not. This meant that there was no recourse for action in case anything went wrong.

In 2021, the CMA found Cytonn had put Ksh123 million ($1.12 million) in real estate properties which is 64 percent of the money pooled by investors in the Cytonn High Yield Fund, a collective investment scheme (CIS).

This was contrary to the CMA regulations that only allow pooled funds to invest less than 25 percent in one single entity.

Administration and Court Cases

In the same year, Cytonn asked to be placed under administration because it had capital contributions from 886 investors amounting to Sh4,180,992,923. The court granted the Administration Order and Kereto Marima, who had been proposed by CPN directors, was appointed as the Administrator.

When it emerged that the company was struggling to pay investors their returns, investors sought redress in court.  On January 6, Justice Mabeya stated:

It is not in dispute that Cytonn Real Estate Project Notes (CPN) is seriously ailing and the Creditors have suffered and continue to suffer as CPN is unable to pay what it owes them. The Court is therefore of the view that the viable option would be to liquidate the company and to appoint a Liquidator who will have the interests of the Creditors at heart,”

Basically, the court ruling opened up the path for some of Cytonn’s properties to be sold to recover the sums owed to investors. Further, the high court judge ruled there was no need to extend the administration

The judge observed Cytonn’s fortunes couldn’t turn around as the Administrator had confirmed that the company had no credible funding source.

BRITAM Vs Cytonn Investments

Cytonn also had another case in Court brought by BRITAM. BRITAM made a complaint to the police in October 2014. In the complaint, the company alleged the former managers had fraudulently misappropriated Ksh1,171,597,756.

The executives then proceeded to resign and launched the rival Cytonn Investment. The matter has seen its way through the judicial system and reached the Supreme Court. However, the Supreme Court threw out the appeal to stop BRITAM’s case against founders Edwin Dande, Elizabeth Nkukuu, and Patricia Wanjama.

The appellants’ appeal is one for dismissal and the proper path for them to follow is to face the charges at the Chief Magistrate’s Court and let that court determine their innocence or guilt. They have not persuaded us that they are entitled to any relief and we so find,” ruled Chief Justice Koome.

Cytonn Investments Sues Orwa/Mwango Capital

It is the High Court’s ruling on the liquidation that led Orwa, a frustrated investor to produce a YouTube episode. His action and Mwango Capital’s post on X led to a lawsuit filed by Cytonn Investments.

Mr. Orwa is named as First Defendant/Respondent and Mwango Capital is named as 2nd Defendant /Respondent.

The 1 Defendant/Respondent, with no identifiable investment experience, proof, or reasonable presumption, elected to publish on the 26th June 2023 on his YouTube channel dubbed ‘Orwa’s platforms such as Twitter and LinkedIn, unfounded statements and utterances that are defamatory to the Plaintiff/Applicant, thus occasioning great harm and injury to its business operations.” wrote Cytonn in the court filings.

It is important to state that this matter lies in front of a court of law and the judgment is solely the court’s jurisdiction.

What interested me is this is not the first time digital content regarding Cytonn has been put out. On YouTube alone, there are several videos.

Lynn Ngugi’s Video

Let’s go back to 2021 when a video posted on YouTube went viral. Lynn Ngugi alleged that the company was frustrating her after making an initial investment in 2019. Upon one year of the maturity period, she alleged Cytonn did not pay her.

Cytonn has been frustrating myself and my friends. We invested with them a while back,” she claimed. Expressing frustrations about the lack of returns as promised Ms. Ngugi added “Come on Cytonn, stop being a Scam

Due to the video, the then CMA chief executive, Mr. Wycliffe Shamiah, advised investors to only put their money in licensed and approved entities that offer regulated products, to enable them to get protection from the Authority through the capital market’s legal and regulatory framework.

The Authority confirms that Cytonn Investments is not a licensed and approved entity,” Mr. Shamiah said.

Investors who are affected by investing in unregulated products should report to the Capital Markets Fraud Investigation Unit (CMFIU), which is the Police Unit attached to the Capital Markets Authority. CMFIU is currently investigating the issue of criminal violations for investors in the Cytonn High Yield Solutions (CHYS),” he added.

Surprisingly, this video did not attract a lawsuit from Cytonn Investments on the same grounds as Orwa’s video.

The Post On X

Mwango Capital’s Tweet on the YouTube episode was seen as offensive due to the large audience they command on X.

That on or about the 26th day of June 2023, the 2nd Defendant having a large following on its Twitter account proceeded to post and repost defamatory comments made by the 1st Defendant without remotely exercising due diligence in ascertaining the accuracy of the statements therein” reads part of the court filing.

Main Stream Media vs. Independent Content Creators

What is surprising is that Cytonn tribulations have been well covered and documented by the Main Stream Media. This is both in print, on TV, and digital platforms. A quick search on Google will clearly outline this.

A quick search on Google

Additionally, Cytonn would like the YouTube video by Orwa to be pulled down due to the use of the word “Ponzi Scheme”. Again, I find it strange that mainstream media has not been subjected to the same standards.

For example, this article in the Daily Nation uses the words “Con” and “Pyramids scheme” when referring to Cytonn Investments activities.

Screenshot from a past Daily Nation Article

Mwango’s case is also curious as Twitter is full of people sharing their takes on Cytonn and the executive team. In fact, one just has to take a look under Mr. Dande’s posts on X to find a plethora of allegations. Moreover, does the research firm have a larger audience than Mainstream Media?

So, one has to wonder, is this a case against small independent content creators? Is there something more?

Further, it raises the eyebrows of netizens who willingly share and reshare content from bloggers, YouTubers, and other digital creators.

Court Decision Will Interest Content Creators

Kenyans should be well aware that personal media platforms are bound by laws. For instance, two Kenyans have recently found themselves in the hands of the law for violating the Computer Misuse and Cybercrimes Act.

Further, the provisions of the Data Protection Act have seen heavy penalties handed out to businesses. These are just some of the regulations one should consider when creating digital content.

However, many will be wondering if a personal account of an occurrence is set to land them in court. We all read or view victims being interviewed on mainstream media.

For instance, the former chairman of the Association of Construction Managers of Kenya Okowa Nahashon stated this to the People Daily:

 “What financial innovation are you talking about when a developer takes a buyer deposit and cannot deliver units more than three years down the line? What are they innovating? That’s not innovation, probably theft,”

Hence, questions have to be raised on where the line is drawn when one shares an opinion via press outlets in comparison to personal platforms. This is especially about people who are verifiably aggrieved and would like to share first-person versions of the story. In the digital world, user generated content (UGC) is very much part and parcel of content we all consume.

Secondly, what does resharing content mean legally? Does the law apply differently based on the number of followers when one reshares?

The case MCCC/E3479/2023 – Cytonn Investments Management PLC   VS CHRIS OBONGO ORWA AND Mwango Capital has been listed for ruling on 27th October 2023.

Certainly, many digital content creators and netizens will be interested in the directive the court issues on this matter