Central Bank of Nigeria Suspends Investment Fintechs Bank Accounts for Dealing in Cryptocurrencies

The Central Bank of Nigeria has frozen bank accounts belonging to 4 fintech investment startups.

The fintechs that have had their accounts suspended are:

• Risevest
• Bamboo
• Trove
• Chaka

The above fintechs will not be able to operate bank accounts in Nigeria for 6 months as CBN seeks to probe the financial activities of the players.

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SEE ALSO: Nigerian Fintechs Allowed e-Money Issuance But Remain Prohibited From Issuing Loans

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CBN is mainly alleging that the 4 services, by way of their parent companies, were complicit in operating without licenses as asset management companies.

Furthermore, they are accused of utilizing forex sourced from the Nigerian forex market for purchasing foreign bonds/shares in contravention of a CBN provision issued in 2015.

As a consequence of the forex trades that the companies were involved in, the bank is saying that the companies were making the Naira weaker to the United States dollars, hence, the need to block 15 of their accounts for 180 days.

Moreover, in an affidavit, the bank has claimed that the platforms were violating Nigeria’s trading laws including dealing in cryptocurrency in contravention of the CBN policy.

Two of the affected companies have since issued statements:

Hey guys, in respect to the most recent news regarding @Risevest and our FX dealings, rest assured all user investments and funds are safely managed, funding and withdrawals will continue to be processed as normal and all our US operations are intact.

— All-Father (@eldivyn) August 17, 2021

Hi everyone, we’re aware of the recent reports about us. Our legal and government relations teams are looking into it but we thought it was important to let you know that your money remains safe with Bamboo and will always be readily accessible.

— Bamboo (@investbamboo) August 17, 2021

Investment fintechs have become popular, particularly among young urban Nigerians, allowing them to invest in foreign stocks and bonds, with experts saying they have increased financial inclusion in the country.

At the end of July 2021, Nigeria’s Central Bank (CBN) stopped the sale of foreign exchange (FX) to Bureau De Change (BDC) operators in the country. It also halted the registration of new players.

According to CBN, this move was a result of the money changers becoming wholesale dealers and illegally trading FX to the tune of millions of dollars per transaction, yet the regulator expects them to not be making trades beyond $5, 000.

Following this directive, a few opinion leaders have expressed concern that this could further drive startups and customers into crypto.

The first casualty of freezing the accounts of a startup for 6 months is customer confidence. More startups will even opt to keep their money outside Nigeria. More customers will move towards crypto. This was not a well-thought-out move.

— Osaretin Victor Asemota (@asemota) August 18, 2021

The bank has also warned people who abuse the Naira by stepping and hurling it during social functions, that they face action from law enforcement.

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RECOMMENDED READING: 47% of Deals Closed in the First Half of 2021 are in the Fintech Sector – Inside the 2021 Africa Investment Report

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