Nigerian Authorities Recover $100,000 from Two Cryptocurrency Firms for Unlicensed USDT Conversions

Nigerian Authorities Take Action Against Unlicensed Cryptocurrency Firms

The Nigerian Federal Government is stepping up its enforcement against cryptocurrency firms, having recently secured nearly $100,000 (approximately NGN160 million) from two companies accused of conducting unlicensed conversions of tether (USDT) to the Nigerian naira.

The firms, Paparaxy Global Ventures Limited and Lemskin Technologies Limited, have come under scrutiny for allegedly providing these services without the necessary banking license.

What Led to the Plea Agreement?

Reports indicate that both companies entered a plea bargain agreement with the Economic and Financial Crimes Commission (EFCC).

The existence of this agreement was disclosed by EFCC lawyer Ogechi Ujam during a recent court session.

"We request the court to adopt the deal," Ujam stated, emphasising the seriousness of the allegations against the firms.

Following her request, Nigerian High Court Judge James Omotosho adjourned the case to 22 October 2024, allowing for further consideration of the plea deal.

Implications of Recent Regulatory Developments

This case unfolds against the backdrop of Nigeria’s evolving regulatory landscape concerning digital currencies.

Just weeks prior, the country’s securities regulator made headlines by granting its first digital asset exchange licenses to local firms Busha and Quidax.

While this move has been largely welcomed as a step towards greater legitimacy in the cryptocurrency space, authorities have made it clear that they will not tolerate illegal operations.

The Nigerian Securities and Exchange Commission warned that it would take firm action against platforms operating outside the law, reiterating its commitment to regulating the cryptocurrency market effectively.

Tightening the Screws on Illicit Crypto Activities

To combat unlicensed cryptocurrency exchanges, Nigerian authorities have also begun freezing bank accounts suspected of being linked to local crypto traders.

These actions are grounded in the enforcement of general anti-money laundering and exchange control laws.

By taking such measures, the government aims to mitigate the risks associated with unregulated trading activities.

Charges Against Paparaxy and Lemskin

In the ongoing case against Paparaxy Global Ventures and Lemskin Technologies, the EFCC contends that neither firm was authorised to operate within the Nigeria Autonomous Foreign Exchange Market.

The commission has accused them of violating Section 10(3) of the Money Laundering (Prohibition) Act, 2011, which mandates market participants to report relevant transactions to the Special Control Unit on Money Laundering (SCUML).

Such allegations highlight the potential risks and legal consequences facing companies that engage in cryptocurrency trading without adhering to regulatory requirements.

As the case continues to unfold, it raises significant questions about the future of cryptocurrency operations in Nigeria and the government’s commitment to creating a safer and more regulated financial environment.