Bitcoin startup BitPesa sues Kenyan mobile payments giant Safaricom

According to Kenyan media the Daily Nation, on Tuesday, Bitcoin startup BitPesa and its partner Lipisha sued mobile payment giant Safaricom in the Kenyan High Court.

BitPesa is suing Safaricom for “coercing” its gateway partner, Lipisha, into suspending its services without any notice, with the suspension effective November 12.

This has resulted in BitPesa and Lipisha facing significant challenges in maintaining their businesses. A lawyer told the Daily Nation that BitPesa is in danger of collapse as it is now unable to conduct business.

The two companies sued Safaricom for violating their rights to acquire and own property, fair administration and economic benefits.

BitPesa uses Lipisha as its payment gateway, which can convert Bitcoin into other currencies, including Kenyan shillings on Safaricom’s mobile payment platform M-Pesa .

Safaricom's arguments in court

During a court hearing on Tuesday, Safaricom said it was justified in suspending Lipisha’s services because it had violated Kenya’s central bank’s anti-money laundering rules.

The mobile money operator claimed that Bitpesa failed to obtain authorization from the Central Bank of Kenya for bitcoin transfers. As a result, Bitpesa’s transactions through Lipisha, as well as its accounts with Safaricom, violated anti-money laundering rules.

However, Bitpesa’s lawyers argued that Safaricom had misunderstood the central bank’s request.

“The (central bank) told BitPesa that bitcoin is unregulated in Kenya, but Safaricom insisted it had the effect of a license,” said the lawyer, Kiragu Kimani.

The court's ruling will be announced on December 14, but in the meantime, Lipisha's suspension of services will remain in place.

Elizabeth Rossiello, CEO and co-founder of BitPesa, said:

“I don’t want to comment too much on what is going on in court. BitPesa is already very aggrieved, which is why we are taking this matter to court. I am very disappointed that the media is still publishing information that is not worth fighting for, but we can let the court decide this matter. We still believe that even a small company like BitPesa can get a fair trial, and we look forward to the court’s decision.”

Rossiello did not immediately respond when asked what "false news" the media reported. Neither Kimani nor Safaricom responded to requests for comment.

A notable case

According to an independent payments analyst in Kenya, the court’s ruling against BitPesa and Lipisha could spark interest from international digital currency firms.

According to the Kenya Competition Authority, M-PESA is the main mobile payment company in Kenya, accounting for two-thirds of the market. Its main competitors are operators Airtel and Orange.

BitPesa, which raised $1.1 million in funding from Pantera Capital and other investors in February, offers bitcoin trading and remittance services in four countries in Africa.

Original article: http://www.coindesk.com/safaricom-and-bitpesa/
By Joon Ian Wong
Compiled by: Satuoxi
Editor: Satuoxi
Source (translation): Babbitt Information (http://www.8btc.com/bitpesa-safaricom)