CASE STUDY | The 2015 Case That Set a Precedent for Companies Facilitating Bitcoin Transactions in Kenya

In 2015, Kenya’s High Court declined to grant interim orders sought by payments firm, Lipisha Consortium, and bitcoin-linked startup, BitPesa, against telecom operator, Safaricom, in a dispute over suspended mobile money services tied to cryptocurrency transactions.

In a ruling delivered in Nairobi, the court said the petitioners had failed to establish a prima facie case warranting conservatory relief, allowing Safaricom to maintain restrictions imposed on the firms’ access to its M-PESA platform.

The case arose after Safaricom suspended services to Lipisha on November 12 2015 citing concerns that its platform was being used to facilitate bitcoin-related transactions through BitPesa which had not obtained regulatory approval from the Central Bank of Kenya.

Lipisha and BitPesa argued the suspension was carried out without notice and violated constitutional rights, including fair administrative action, property rights, and consumer protections. They sought court orders to restrain Safaricom from disrupting their services pending the hearing of the petition.

Safaricom countered that the dispute was commercial in nature and governed by contract which included an arbitration clause. It also argued that allowing the firms to continue operating could expose it to regulatory risk, particularly given Kenya’s strict anti-money laundering and payments regulations.

In its decision, the court held that while it had jurisdiction to hear constitutional claims, the applicants had not demonstrated a likelihood of success or that they would suffer irreparable harm if interim orders were denied.

The judge noted that Safaricom’s contract permitted suspension of services, in some cases without prior notice, and found the telecom operator had plausible grounds to act, given concerns over unregulated bitcoin activity.

The court also observed that bitcoin transactions could fall within the scope of money remittance business, which typically requires regulatory oversight, adding that unresolved questions around licensing should be addressed at the full hearing.

Public interest, the court said, weighed against granting the orders, warning that doing so could effectively endorse a potentially unregulated financial activity before the matter was fully determined.

The application for conservatory orders was dismissed with costs, with the court suggesting the dispute may ultimately be better resolved through arbitration as stated in the parties’ agreement.

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