Nigeria Clamps Down on Crypto Companies
Nigeria has recently witnessed severe sanctions meted out by local authorities against two cryptocurrency companies. The allegations against both businesses revolved around their operation of transactions involving the conversion of Tether (USDT) – one of the world’s most popular cryptocurrencies – into the local currency, the naira, without proper licensing.
Enforcement of Financial Regulations
Authorities hit the cryptocurrency businesses – Egomsinachi Road Autos Limited and Chimera Log & Haulage Services Limited – with hefty fines for contravening the nation’s financial regulations. The Federal High Court residing in the nation’s capital, Abuja, was responsible for the convictions. The charges were principally rooted in the illegitimate crypto trading activities of the two firms.
Presiding over the case, Justice Joyce AbdulMalik instructed these crypto companies to pay a combined penalty of 50 million NGN, equivalent to approximately $30,000. The ruling was a result of the Economic and Financial Crimes Commission (EFCC) successfully arguing for such a punishment via a plea deal.
Additional Fines and Government Earnings
Not stopping at the main fine, the court further imposed an extra fine of 500,000 NGN ($897) on both firms. This additional fine goes straight to the Federal Government of Nigeria’s coffers. This recent action against unauthorized cryptocurrency activities marks the third instance of the Federal High Court in Nigeria convicting companies under these grounds.
Official Gredo, another cryptocurrency firm, had earlier been convicted for unauthorized crypto activities. This company was asked to forfeit a whopping 140 million NGN to the government as a part of its punishment.
Charges and Legal Implications
Accusations against the two convicted companies featured their alleged failure to report the full extent of their transactions to the EFCC’s Special Control Unit on Money Laundering. This duty, stipulated under Section 11(3) of the Money Laundering (Prevention & Prohibition) Act, 2022, was flouted by the firms.
The principal charges of transacting in USDT to naira without the proper licensing point to a significant violation of Nigeria’s robust financial regulations. The firms also reportedly operated in the specialized financial sector without the appropriate licenses, neglecting to register as dealers in the Nigeria Autonomous Foreign Exchange Market.
Guilt Admission and Court Proceedings
The director of the two indicted companies, Chukwubuka Felix Ogumba, admitted guilt to the charges filed against his firms. After this admission, EFCC attorney Ogechi Ujam asked the presiding judge to enforce the agreed-upon plea bargain settlement on the firms.
Ogumba’s legal representative, Chikaoso Ojukwu SAN, corroborated the plea bargain agreement and urged approval from the court. Following this, the judge directed Ogumba to provide evidence of good behavior in the form of an affidavit to the court.
Previous Violations and Fines
This recent crackdown is not the first instance of Nigerian authorities punishing crypto firms for unauthorized transactions. Previously, Paparaxy Global Ventures Limited and Lemskin Technologies Limited, two other Nigeria-based crypto companies, were ordered to pay 160 million NGN ($95,661) to the federal government for similar offenses.
These sanctions underscore the Nigerian government’s crackdown on cryptocurrency businesses operating without the proper authorization and enforcement of rigorous financial regulations.
