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The Nigerian Securities and Exchange Commission (SEC) has proposed amendments to the Investment and Securities Act, introducing harsher penalties for individuals involved in cryptocurrency-related frauds.
The draft law outlines punishments of fines up to $12,000 (20 million Naira) or 10 years of imprisonment for offenders, according to a recent report.
This bold move aims to deter criminals who exploit the term “cryptocurrency” to manipulate and scam investors. The new regulations are expected to reduce fraudulent activities that have caused widespread financial losses.
Nigeria’s Struggle Against Crypto Frauds
As one of the largest cryptocurrency markets globally, Nigeria faces significant challenges due to its reputation as a hotspot for scams, which not only harm investors but also hinder the growth of the cryptocurrency sector.
Fraudulent schemes, such as Ponzi platforms posing as legitimate investment opportunities, have led to substantial financial losses and tarnished Nigeria’s image in the international financial community.
One infamous example was MMM Nigeria, which collapsed in 2016, leaving millions of Nigerians financially devastated.
Balancing Growth and Regulation
Despite these challenges, Nigeria remains a rapidly growing crypto economy. In September 2023, Chainalysis reported Nigeria ranked second globally in cryptocurrency adoption. The country also topped global Google search volumes for terms like “cryptocurrency” and “buy crypto.”
However, Nigerian regulators have shown resistance to this rapid growth.
- In the same month, Nigeria’s SEC declared Binance Nigeria Limited an illegal entity, citing its unregistered status and lack of oversight.
- In February 2024, a presidential adviser called for a ban on platforms like Binance and KuCoin.
- Two years earlier, Nigeria’s central bank had already prohibited regulated financial institutions from providing services to crypto exchanges, further complicating the market’s development.
Nigeria’s approach reflects a tense balancing act—promoting innovation while curbing fraud and ensuring investor protection. Whether this crackdown will foster trust or stifle growth remains to be seen.
Binance Legal Dispute Escalates, Tarnishing Nigeria’s Reputation
In June, the Blockchain Industry Coordinating Committee of Nigeria (BICCoN) voiced its concerns over the ongoing legal dispute between Binance and the Nigerian government.
Representing Nigeria’s blockchain industry, BICCoN urged the government to adopt a balanced approach in resolving the conflict, warning that the dispute could harm the local blockchain ecosystem and Nigeria’s international reputation.
The detention of Binance executives and the ongoing legal proceedings have created uncertainty and risk, potentially deterring investors and partners from engaging with Nigeria’s blockchain sector, said BICCoN President Lucky Uwakwe.
International Concern Over Binance Executive’s Detention
In the same month, U.S. lawmakers French Hill and Chrissy Houlahan visited Nigeria’s Kuje Prison to meet with Binance executive Tigran Gambaryan, who had been detained.
Hill expressed concern over Gambaryan’s conditions, calling his detention unjust and highlighting the poor state of the prison. He also pointed out health issues Gambaryan had faced during his imprisonment.
On June 14, a court ruled that Gambaryan and his colleague, Nadeem Anjarwalla, were not guilty of tax evasion charges. Recently, all money laundering charges against Gambaryan were officially dropped by the Nigerian government.
Timeline of Events
Gambaryan had been detained in February alongside Anjarwalla during a visit to Nigeria. While Anjarwalla managed to escape, Gambaryan remained in custody at Kuje Detention Center.
The case has sparked international attention, raising questions about Nigeria’s handling of high-profile crypto disputes and their potential impact on investor confidence and regulatory clarity in the country.
