•Nigeria in grave danger over Crypto-Currency Transaction, Emefiele Tells Senate
••Reverse $3m Cryptocurrency Fraud
•Cryptocurrency played active part in financing #EndSARS protest–Awasonoye
••Says virtual assets, Crypto-Currencies risky for Nigeria’s economy
The Central Bank of Nigeria and the Nigerian Financial Intelligence Unit has reversed a $3 million fraud back to a country.
This is coming as the Chairman of the Independent Corrupt Practices and Other Related Offences Commission (ICPC), Prof. Bolaji Awasanoye, warned that Cryptocurrency did not only fund the EndSARS protests but very risky to the corporate existence of Nigeria to the extent that it can fund insurgency.
The fraud was perpetuated through the usage of Cryptocurrency.
Speaking, the Governor of the Central Bank of Nigeria, Godwin Emefiele, on Tuesday told the Senate Committee on Banking and Finance, Capital Market, ICT/Cyber Security that the country is in grave danger with the transaction in Crypto-Currency and Bitcoin.
Emefiele who appeared before the Senate Committee said that the virtual money component has been used by kidnappers and money launders to facilitate their illicit intentions.
The Senate had about two weeks ago summoned the apex bank boss to appear before it to explain why cryptocurrencies was banned.
CBN had earlier this month ordered banks and other financial institutions in the country to close all crypto-currency accounts.
The apex bank had stated that it carried out the order because Cryptos were being used as tools for money laundering and sponsoring illicit activities.
But Emefiele disclosed that Nigeria comes second in the world after the United States in Crypto-Currency transaction because of rate of illegality it has assumed in the last three years
Emefiele also disclosed that the economic elements of the virtual transaction shields its players against being investigated.
He said, “Players in the dark financial system cannot be trailed that is why most governments in the world have not approved of it.
“We know enough at this stage to decide that the continuation of this crooked activity significantly threatens the safety and soundness of our financial system.
“The CBN has a responsibility as a primary regulator to protect activities of all actors and stakeholders and particularly uninformed actors in that space.
“That is why we have asked all banks to desisit from operating accounts to Crypto-Currency dealers in Nigeria.
“For the avoidance of doubt, we have asked our banking supervisors, our payment system and our ICT department to conduct a thorough investigation into the activities of current exchanges and their major players.
“The results of the investigation will lead to better understanding of their activities and may unveil their fraud in due cause.
“We know Crypto-Currency has been used to facilitate scam, they have been known to facilitate money laundering, they have been known to be an avenue through which kidnapers received ransoms and they have been known to be instrument use to finance terrorism not only in Nigeria but in different parts of the world.”
Kicking against the use of Crypto-currencies during his presentation, the Director/Chief Executive Officer of the Nigerian Financial Intelligence Unit, Tukur Moddido argued strongly why it should not be used.
He added that it failed the critical tests of vulnerability and attendant risks.
He disclosed that through its Cyber Intelligence, NFIU was able to stop a scam of roughly $3m.
He said: “Only last week, together with the Central Bank, we reversed more than $3m dollars back to a particular country. This is how bad it is.”
Moddido said that it was used to sponsor violence in Nigeria, adding, “if you like, call it terrorism, kidnapping or whatever it is. This is just the practical aspect of it.”
In a related development, the Independent Corrupt Practices and other related offences Commission has disclosed that Cryptocurrency played an active role in financing the #EndSARS protest in Nigeria.
The anti-graft agency, which revealed this on Tuesday, thus backed the decision of the Central Bank of Nigeria to ban the use of Cryptocurrency by Financial Institutions.
Speaking before the Senate Joint Panel on Banking, Insurance and Other Financial Institutions, Cybercrime and Capital Markets, Owasanoye, told the lawmakers that Cryptocurrency played an active role in the EndSARS protest and it was an indication it can be used to fund insurgency.
According to Owasanoye: “Those who made contributions do not want to be known.
“It can be easily be used to fund insurgency.
“They are people who do business and get paid in Cryptocurrency.”
Speaking further, Awasonoye, warned that virtual assets and Crypto-Currencies are risky for implementation in Nigeria.
He made this known in his presentation to the Senate Committee on Banking, Insurance and Other Financial Institutions during its hearing on the Central Bank of Nigeria’s decision to stop financial institutions from transacting in Crypto-Currencies.
He said: “Virtual and Crypto-Currencies pose serious legal and law enforcement risks for Nigeria. The current National Identification Number registration and linking with SIM cards is a pointer to the fact that insurgents, terrorists, kidnappers, bandits, and drug merchants have used the anonymity of unregistered SIM cards to commit their crimes with relative ease.
“Crypto-Currencies guarantee similar anonymity and can easily be used as leverage for terrorist financing and other crimes. With the NIN registration, Crypto-Currencies may become an alternative payment platform for kidnappers and this would be impossible for law enforcement to agencies to trace.”
The ICPC boss cited a case study of a current investigation by the Commission on money laundering involving several hundreds of millions of naira.
According to him, “The main suspect used technology in placing the money in the banking sector. A sizable amount was traced to several bank accounts but before investigators recovered some of the money, a large proportion had been made to disappear using serpentine ICT-aided transfer schemes that has so far eluded investigators.
“While the persons whose accounts were used have been located, the criminal mastermind has remained invisible and unidentified.
“This real ongoing case is a glimpse into the world of anonymity of virtual or digital transactions. With Crypto-Currencies, the wallet of the user of Crypto-Currency system only store information, or encrypted links in the Blockchain where transaction confirmation can be found.
“There is no movement of any ‘currency’ in the real sense of the word. By their very nature, they provide considerable anonymity that is almost impossible to be accessed by unauthorized persons, including law enforcement authorities.”
Owasanoye identified the use of virtual assets and Crypto-Currencies for criminal activities as a major risk associated with them.
He also listed other risks of the use of virtual assets and Crypto-Currencies to include: risk to finance of government, risk of theft of Crypto-Currencies, abuse as medium of payment for hackers and ransomeware, risk of exit scams, risks of use of crypto assets for ponzi schemes, risks of tax evasion, and risk as a source of corruption-linked illicit financial flows.
He further noted that the Central Bank of Nigeria’s ability to regulate monetary policy will be lost due to the fact that Crypto-Currencies are issued by private entities, which are foreign, and not issued or regulated by the bank.