Bitcoin startups and traditional payment companies clash in Africa

According to CoinDesk , the Kenyan High Court held a hearing on Tuesday in the case filed by Bitcoin startup BitPesa and its partners against Safaricom.

BitPesa said Safaricom intimidated its partner Lipisha into suspending services without prior notice . Lipisha reportedly suspended services on November 12 .

Therefore, BitPesa and Lipisha will face huge challenges in continuing to cooperate, and lawyers representing the two companies said that BitPesa will face the risk of collapse because it cannot conduct business.

The two companies accused Safaricom of violating their rights to acquire and own property and their rights to fair management and economic benefits.

BitPesa has tapped Lipisha as its third-party payment platform partner to help it convert bitcoin into other currencies, including Kenyan shillings on Safaricom's mobile payment platform M-Pesa .

Reasons given by Safaricom

During a hearing on Tuesday, Safaricom argued that Lipisha's suspension of service was justified because it violated anti-money laundering rules.

The mobile money operator claimed that Bitpesa did not have authorization from the Central Bank of Kenya to conduct bitcoin remittances, and therefore , that Bitpesa’s transactions through Lipisha’s account on Safaricom were in violation of anti-money laundering rules.

However, lawyers for the two companies said Safaricom had misunderstood the central bank's regulations.

The Central Bank of Kenya told BitPesa that Bitcoin is not regulated in Kenya, but Safaricom insisted that a license was required.

The court will make its ruling on December 14 , during which time services will remain suspended.

BitPesa co-founder and CEO Elizabeth Rossiello said in a statement:

“ I don’t want to make too many comments in court. BitPesa was wrongly accused, which is why we referred this matter to the court. We are deeply disappointed that the media continues to publish false information, but we handed over the evidence to the court and let the court decide. We still firmly 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 to a reporter's question about which media outlet published what false information.

An important trial

Michael Kimani , an independent payments analyst in Kenya , said a ruling in favor of BitPesa and Lipisha would spark interest from international digital currency companies.

“ This is a very important thing, if the verdict is positive for digital currency companies, more businesses will come to Kenya. You will be able to exchange Bitcoin for Airtel Money , for Orange Money . M-Pesa also seems to be controversial.

Mobile payment wallets are a key payment channel in Kenya. According to data released by the Central Bank of Kenya, in 2013 , the transaction volume of mobile payments was more than twice that of bank cards.

In February , BitPesa raised $ 1.1 million in funding from Pantera Capital and other investors to provide bitcoin trading and remittance services to four African countries.

Lipisha is a payments company launched in 2012 by Growth Africa, Village Capital and Met Fund .