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Nigeria’s Securities and Exchange Commission (SEC) is stepping up its fight against cryptocurrency fraud with proposed amendments to the Investment and Securities Act. These changes aim to impose tougher penalties on offenders, signaling the country’s commitment to combating crypto-related scams.
Proposed Penalties for Crypto Offenders
Under the draft legislation, individuals found guilty of cryptocurrency fraud could face:
- Fines of up to $12,000 (20 million Naira).
- 10 years imprisonment.
The SEC hopes these measures will deter criminals from exploiting the cryptocurrency market to deceive unsuspecting investors.
Nigeria’s Battle with Crypto Scams
Despite being one of the world’s largest cryptocurrency markets, Nigeria has long grappled with a reputation as a hub for scams. These fraudulent activities have resulted in massive financial losses for citizens and tarnished Nigeria’s image in the global financial ecosystem.
Key Scam Example: MMM Nigeria
One infamous scam, MMM Nigeria, collapsed in 2016, devastating millions of Nigerians who had invested in the Ponzi scheme disguised as a legitimate platform.
Nigeria’s Growing Crypto Adoption
Nigeria has emerged as a global leader in cryptocurrency adoption.
- In September 2023, a Chainalysis report ranked Nigeria second worldwide for cryptocurrency adoption.
- The country is also the most crypto-obsessed nation, based on Google search volumes for terms like “cryptocurrency” and “buy crypto.”
Despite this enthusiasm, regulators in Nigeria have shown hesitancy. The central bank and SEC have taken measures to curb unregulated crypto activities, including:
- Declaring Binance Nigeria Limited illegal in September 2023.
- Calling for a ban on platforms like Binance and KuCoin in February 2024.
- Banning financial institutions from serving crypto exchanges in 2021.
Binance Legal Disputes and Their Impact
The ongoing legal drama between Binance and Nigerian authorities has further complicated the country’s crypto landscape.
Detention of Binance Executives
In February 2024, Binance executives Tigran Gambaryan and Nadeem Anjarwalla were detained during a visit to Nigeria.
- Anjarwalla escaped custody, but Gambaryan remained detained at Kuje Correctional Center.
- U.S. lawmakers French Hill and Chrissy Houlahan visited the prison in June, highlighting concerns about Gambaryan’s health and wrongful detention.
- While charges of tax evasion and money laundering against Gambaryan were dropped, the incident highlighted regulatory tensions in Nigeria.
Industry Concerns and Calls for Balance
The Blockchain Industry Coordinating Committee of Nigeria (BICCoN) has expressed concern over the impact of these legal battles on Nigeria’s blockchain ecosystem.
- Lucky Uwakwe, BICCoN President, emphasized the need for balanced regulatory approaches to protect the industry’s growth while addressing fraud.
The Future of Crypto in Nigeria
As Nigeria navigates these challenges, the proposed stricter penalties aim to restore confidence in its crypto sector while addressing fraud. However, the balance between fostering innovation and ensuring regulatory compliance will be critical to sustaining the country’s reputation as a global crypto leader.
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