Nigeria’s Securities and Exchange Commission (SEC) has proposed amendments to the Investment and Securities Act, introducing tougher penalties for cryptocurrency fraud.
Under the bill, offenders could face fines of up to $12,000 (20 million naira) or 10 years in prison, according to a recent report. The new measures could help stop fraudsters from using the term “cryptocurrency” to defraud investors.
Nigeria grapples with fraud
Nigeria, one of the world’s largest cryptocurrency markets, is struggling with a reputation as a center of fraud, which is hampering its growth. These activities have not only led to significant financial losses for individuals, but have also damaged the country’s reputation in the global financial community.
One common scam is financial pyramid schemes impersonating legitimate investment platforms. A notable example is the MMM Nigeria scheme, which collapsed in 2016, affecting millions of Nigerians.
The Nigerian government has also faced challenges in regulating the burgeoning cryptocurrency market, despite the country becoming one of the fastest growing cryptocurrency economies in the world in recent years.
September 2023. Chainalysis, a major cryptocurrency intelligence company, ranked Nigeria as the world’s second largest cryptocurrency adopter. What’s more, Nigeria was the country most fascinated with cryptocurrencies based on the volume of Google searches for keywords such as “cryptocurrency” or “buy cryptocurrency.”
However, regulators in Nigeria have shown less enthusiasm for the rapid pace of cryptocurrency adoption.
In September 2023, the Nigerian Securities and Exchange Commission (SEC) declared Binance Nigeria Limited illegal, stating that the platform was neither registered nor regulated by the commission.
In February 2024, an adviser to Nigeria’s president called for a ban on Binance, KuCoin and other cryptocurrency trading platforms in the country. Two years ago, Nigeria’s central bank banned regulated financial institutions from providing services to cryptocurrency exchanges in the country.
Binance’s legal drama further damages Nigeria’s reputation
In June, the Blockchain Industry Coordinating Committee of Nigeria (BICCoN) raised concerns about ongoing legal disputes between cryptocurrency exchange Binance and the Nigerian government.
BICCoN, which represents the Nigerian blockchain industry, called for a balanced approach to resolving these issues, noting the potential implications for the country’s blockchain ecosystem and international reputation.
Ongoing legal battles and the detention of Binance directors have created an atmosphere of uncertainty and risk, potentially scaring off potential investors and partners, according to BICCoN CEO Lucky Uwakwe.
In June, U.S. lawmakers French Hill and Chrissy Houlahan visited Kuje Prison in Nigeria, where Binance executive Tigran Gambaryan was being held. Hill described Gambaryan’s unlawful detention in what he called a “horrible prison,” noting the health problems Gambaryan faced while in custody.
on June 14, the court ruled that Gambaryan and Anjarwalla were cleared of tax evasion charges. The country also recently officially dropped all money laundering charges against Gambaryan.
Gambaryan was detained in Nigeria in February along with his colleague, Nadeem Anjarwalla, while visiting the country. While Anjarwalla later escaped, Gambaryan remained detained at the Kuje Correctional Center .
