Large scale crypto-currency scams are rocking Nigeria as fraudulent firms claiming to offer digital currencies buffet on Nigerians while monetary authorities and law enforcement agencies appear helpless. These firms claim they speculate on crypto-currency price movements via a CFD trading account, or buy and sell the underlying coins via exchanges. In reality, they are pyramid schemes or Ponzi schemes whose activities span various illegal activities, such as money laundering and terrorism, illegal drug trafficking, human trafficking, and support for radical movements.
Losses to the scheme are estimated in hundreds of millions of Naira as Nigerians eager to escape hitting economic hardship are lured with mouth-watering offers. Anthony Ogbo, a cyber-security expert, warned, that unless financial regulatory authorities develop a robust financial system and regulation that will accommodate crypto-currency, losses will continue to mount. “Unfortunately, we lack the ability to keep up with the fast changing digital space; and the authorities are not helping matters, they are so lethargic” he said.
Capitalizing on weak regulations and the inability to keep up with the sometimes misleading promise of technology, the firms dangle offers too hard to resist. Chuks Arubaleze, a lawyer, said, that crypto-currency scams are clear and present danger which may get out of hand if something urgent is not done to stem them. “These new scams have all the attributes of wire fraud, bank fraud and operation of unlicensed money transfer and conspiracy. If the authorities are serious, those are enough to begin to crack down on the operators” Arubaleze said. Binus Yaro, a victim of one of the schemes said he could not get justice even after making formal complaints to the Nigerian Police.
According to Yaro, the police did not even invite the promoter of the scheme.”I lost my hard earned money like that” he said.Like many victims of the scam, Yaro was invited by a fraudulent firm through telegram chat group, to pay money into an account after being promised that once the payment was effected, he will get return 100 per cent interest within an hour. According to Yaro, the firm, added him in their telegram chat group and proceeded to make offers to over 3,000 people in the group.
“And some people were testifying they got paid and when the firm sent me a private chat asking me to take advantage of a promo, I did”. He said Yaro, proceeded to make the payment and alerted the firm, which turned around to demand additional money to redouble his initial investment. “When I insisted i only demanded one off investment, the firm could not provide any answer till today and has even removed me from the group. The only thing I have now is the name I paid money to and the account number” Yaro added.
The legal status of crypto-currency in Nigeria remains ambiguous, though Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC), have issued strong notices about the pitfalls of investing in the crypto currency markets.The regulators have also added the risk resulting from the high volatility associated with crypto currencies and the fact that many of the organizations that facilitate such transactions are unregulated.