Nigeria Implements Enhanced Penalties for Cryptocurrency Fraud

Nigeria’s Securities and Exchange Commission (SEC) has put forward proposed changes to the Investment and Securities Act, which would impose stricter penalties for fraud related to cryptocurrency.

According to a recent report, individuals found guilty under the draft legislation could incur fines of up to $12,000 (20 million Naira) or face a prison term of up to 10 years.

The proposed regulations may assist in discouraging fraudsters from misusing the term “cryptocurrency” to mislead investors.

Nigeria Faces Challenges with Scams

Nigeria, recognized as one of the largest cryptocurrency markets globally, has grappled with a reputation as a center for scams, which has impeded its development.

These deceptive practices have resulted in considerable financial losses for individuals and have also damaged the nation’s standing within the international financial community.

A common scam involves Ponzi schemes that present themselves as legitimate investment opportunities.

An infamous instance is the MMM Nigeria scheme, which collapsed in 2016, impacting millions of Nigerians.

The Nigerian government has encountered difficulties in overseeing the rapidly growing crypto market, even as the country has emerged as one of the fastest-growing crypto economies worldwide in recent years.

In September 2023, Chainalysis, a prominent crypto intelligence firm, ranked Nigeria as the second highest globally in terms of cryptocurrency adoption.

Additionally, Nigeria has been identified as the most crypto-focused nation based on Google search trends for terms such as “cryptocurrency” or “buy crypto.”

However, regulators in Nigeria have exhibited less enthusiasm regarding the swift pace of crypto adoption.

In September 2023, Nigeria’s Securities and Exchange Commission (SEC) declared Binance Nigeria Limited illegal, asserting that the platform was neither registered nor regulated by the commission.

In February 2024, an advisor to Nigeria’s president advocated for a ban on Binance, KuCoin, and other cryptocurrency trading platforms within the country.

Two years prior, Nigeria’s central bank prohibited regulated financial institutions from offering services to crypto exchanges operating in the nation.

Binance Legal Issues Further Harm Nigeria’s Image

In June, the Blockchain Industry Coordinating Committee of Nigeria (BICCoN) voiced concerns regarding the ongoing legal conflicts between cryptocurrency exchange Binance and the Nigerian government.

BICCoN, which represents the Nigerian blockchain sector, called for a balanced approach to resolving these matters, highlighting the potential consequences for the nation’s blockchain ecosystem and international standing.

The continuing legal disputes and the detention of Binance executives have fostered an environment of uncertainty and risk, which could dissuade potential investors and partners, according to BICCoN President Lucky Uwakwe.

In June, US lawmakers French Hill and Chrissy Houlahan visited Kuje Prison in Nigeria, where detained Binance executive Tigran Gambaryan is being held.

Hill characterized Gambaryan’s wrongful detention in what he referred to as a “horrible prison,” drawing attention to the health issues Gambaryan is experiencing while in custody.

On June 14, a court ruling exonerated Gambaryan and Anjarwalla of tax evasion charges.

More recently, the country officially dropped all money laundering allegations against Gambaryan.

Gambaryan was detained in Nigeria in February alongside his colleague, Nadeem Anjarwalla, during a visit to the country.

While Anjarwalla later managed to escape, Gambaryan remained in custody at the Kuje Correctional Center.

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