Nigeria’s Securities and Exchange Commission (SEC) has proposed amendments to the Investment and Securities Act, introducing tougher penalties for cryptocurrency-related fraud.
Under the draft legislation, offenders could face a fine of up to $12,000 (20 million Naira) or a 10-year prison sentence, according to a recent report.
The new measures might help deter scammers from exploiting the term “cryptocurrency” to deceive investors.
Nigeria Struggles with Scams
Nigeria, one of the world’s largest cryptocurrency markets, has struggled with a reputation as a hub for scams, hindering its growth.
These fraudulent activities have not only led to significant financial losses for individuals but have also tarnished the country’s reputation in the global financial community.
One prevalent scam involves Ponzi schemes masquerading as 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 crypto market despite the country emerging as one of the fastest-growing crypto economies globally in recent years.
In September 2023, Chainalysis, a major crypto intelligence firm, ranked Nigeria second in the world in terms of cryptocurrency adoption.
Moreover, Nigeria has been the most crypto-obsessed country based on Google search volumes for terms like “cryptocurrency” or “buy crypto.”
However, regulators in Nigeria have shown less enthusiasm for the rapid pace of crypto adoption.
In September 2023, Nigeria’s 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 crypto trading platforms in the country.
Two years ago, Nigeria’s central bank prohibited regulated financial institutions from providing services to crypto exchanges in the nation.
Binance Legal Drama Further Damages Nigeria’s Reputation
In June, the Blockchain Industry Coordinating Committee of Nigeria (BICCoN) expressed concerns over the ongoing legal disputes between cryptocurrency exchange Binance and the Nigerian government.
BICCoN, which represents the Nigerian blockchain industry, urged a balanced approach to resolving these issues, noting the potential implications for the country’s blockchain ecosystem and international reputation.
The ongoing legal battles and detention of Binance executives have created an atmosphere of uncertainty and risk, potentially deterring potential investors and partners, according to BICCoN President Lucky Uwakwe.
In June, US lawmakers French Hill and Chrissy Houlahan made a visit to Kuje Prison in Nigeria, where detained Binance executive Tigran Gambaryan is being held.
Hill described Gambaryan’s wrongful detention in what he called a “horrible prison,” bringing attention to the health concerns Gambaryan is facing while in custody.
On June 14, there was a court ruling that cleared Gambaryan and Anjarwalla of tax evasion charges.
More recently, the country also officially dropped all money laundering charges against Gambaryan.
Gambaryan was detained in Nigeria in February alongside his colleague, Nadeem Anjarwalla, during a visit to the country.
While Anjarwalla later escaped, Gambaryan remained held at the Kuje Correctional Center.
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