How Forex Trader ‘Tosh’ Defrauded Clients Of Sh215M

Michael Gitonga, alias Tosh, a prominent Nairobi-based forex trader and founder of Trade Sense Limited, has been charged with defrauding clients of Sh215.3 million, marking a dramatic fall from grace for the once-licensed money manager.

The allegations come just days after the Capital Markets Authority (CMA) suspended Trade Sense’s operating licence for 90 days on March 3, citing multiple regulatory breaches that undermined investor protection and market confidence.

Gitonga was arraigned in court on Wednesday, facing accusations of misappropriating Sh212.16 million in client funds between April 2022 and August 2024. The charge sheet alleges that, as a licensed money manager, he knowingly diverted these funds—intended for online foreign exchange trading—for his personal use.

Additionally, he is accused of obtaining Sh3.14 million from three separate parties under false pretenses, promising to invest their money in forex trading on their behalf.

The charges detail specific instances of deceit: between April 2023 and April 2024, Gitonga allegedly obtained Sh1.3 million from Ingotse 95, an investment company; Sh1.54 million from Chepkemboi Labbat between March 27 and April 12, 2024; and Sh300,000 from James Mwaura Mbugua between March 2022 and September 2024.

In each case, he is said to have misrepresented his intentions, claiming the funds would be invested in the lucrative but volatile forex market.

A Breach of Trust and Regulation

Under Kenya’s Online Foreign Exchange Trading Regulations, introduced by the CMA in 2017 to curb fraud in the fast-growing sector, money managers like Gitonga are strictly prohibited from handling clients’ funds directly.

Their role is limited to overseeing portfolios—offering investment strategies, financial analysis, and trade recommendations—in exchange for a fee based on a percentage of assets under management.

Clients are required to deposit funds into their own trading accounts through a licensed online forex broker, who provides the trading platform and regular statements.

“Michael Gitonga, on diverse dates between April 28, 2022, and August 29, 2024, being a licensed money manager at Trade Sense Limited, knowingly converted for your personal use Sh212.16 million intended for online foreign exchange trading,” the charge sheet reads, highlighting a blatant violation of these rules.

The CMA’s decision to license only non-dealing brokers—who provide platforms and accounts but do not execute trades or access client funds—reflects the high-risk nature of forex trading, which demands robust safeguards.

Kenya’s tech-savvy population has increasingly tapped into the $7.5 trillion-a-day global forex market over the past decade, fueling demand but also attracting rogue operators promising unrealistic returns.

Trade Sense’s Downfall

Trade Sense Limited, which targeted retail investors with a minimum investment of Sh258,380 ($2,000) and high-net-worth clients with Sh1.2 million ($10,000), had been under CMA scrutiny for two years before its licence suspension.

The regulator cited failures in governance, financial fidelity, anti-money laundering compliance, and operational standards.

On Monday, CMA Chief Executive Wyckliffe Shamiah emphasized that the suspension was a necessary step to protect investors and maintain market integrity.

“During the 90-day suspension period, CMA will conduct a review to determine whether to lift the suspension or take further regulatory or enforcement action as may be necessary,” the authority stated. The move follows a surge in forex-related fraud cases, which prompted the 2017 regulations aimed at reining in unregulated entities.

Gitonga’s case highlights the dangers of Kenya’s rapidly expanding online forex trading industry, where legitimate opportunities coexist with predatory schemes.

The CMA, established in 1989 under the Capital Markets Act, has worked to foster an orderly and efficient market, but rogue traders continue to exploit gaps.

Trade Sense’s lock-in period of 90 days and a 3% daily-prorated management fee had lured investors, only for many to now face significant losses.

As the case progresses, investors and regulators alike will be watching closely to see whether Gitonga faces further legal consequences. The CMA, meanwhile, continues to stress the importance of investor education and stringent oversight to safeguard Kenya’s forex trading industry from fraudsters.

For now, clients of Trade Sense Limited can only wait and hope for justice as the regulator works to restore confidence in the country’s forex markets.