The Nigerian government received nearly $100,000 (about NGN160M) from two cryptocurrency companies: Paparaxy Global Ventures Limited and Lemskin Technologies Limited who they accused of conducting illegal conversions of USDT (a cryptocurrency) to naira and vice versa because they didn’t have the necessary banking licenses to operate legally.
The Plea Agreement
After being accused by the Nigerian authorities of violating the law by lacking the proper banking licenses to conduct their operations, these two companies, Paparaxy Global Ventures Limited and Lemskin Technologies Limited entered a plea agreement with the Economic and Financial Crimes Commission (EFCC).
The EFCC lawyer, Ogechi Ujam, who announced the plea deal to the court, asked the court for approval. This appeal by Ujam resulted in the case being adjourned to October 22.
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Context of the Crypto Regulatory Environment
The indictment of the two companies by the Nigerian authorities came after the warning on unlicensed crypto service providers to seek license or face legal action. This was weeks after the country’s securities regulator granted its first digital asset exchange licenses to two local firms, Busha and Quidax.
Additionally, beyond targeting the illegally-operating cryptocurrency platforms, the Nigerian authorities are also freezing bank accounts suspected to belong to unlicensed cryptocurrency traders. They are using anti-money laundering laws and exchange control regulations to enforce this.
In the case of Paparaxy and Lemskin, the EFCC accused the firms of participating in the Nigeria Autonomous Foreign Exchange Market without authorization. Additionally, they violated section 10(3) of the Money Laundering (Prohibition) Act of 2011 by failing to report their transactions to the Special Control Unit on Money Laundering (SCUML), a requirement for such financial activities.
What You Should Know
Nigeria is trying to balance encouraging cryptocurrency adoption with enforcing strict regulations to prevent illegal activities, ensuring that the sector grows in a more secure and compliant manner.
