Nigerian Government Files Criminal Lawsuit Against Four Crypto Traders for Unauthorized USDT Transactions

Recently, the Federal Government of Nigeria took action against four crypto traders: Ejiogu A. Chinedu, Nnamdi F. Okereke, Oty Ugochukwu Stanley, and Chukwuebuka F. Ogumba. They filed a criminal lawsuit for trading USDT and Naira without a proper banking license.

According to documents obtained by Nairametrics, the government claims these traders violated the Banks and Other Financial Institutions Act of 2020. They are asking the Federal High Court in Abuja to impose penalties.

This lawsuit follows an investigation by the Nigerian Economic and Financial Crimes Commission (EFCC). The EFCC looked into suspicious activities involving several bank accounts used to manipulate the Naira's value and launder money.

The EFCC initially sought to freeze the accounts linked to these activities. A court granted this request, freezing over 1,000 accounts on April 24 for more than ninety days. These accounts held over N548.6 million, which is about $330,000.

Though the traders managed to lift some freezing orders, this relief was short-lived. The EFCC filed another motion to freeze the accounts until their investigation is complete. The court approved this motion on September 4, coinciding with separate criminal charges against the account operators.

In the government's case, they argue that the traders acted as unauthorized dealers in Nigeria's Autonomous Foreign Exchange Market (AFEM). They allegedly negotiated USDT to Naira rates publicly, which violates Section 29(1)(c) of the Foreign Exchange Act. This section prohibits any foreign exchange negotiations that aren’t legally permitted.

Additionally, the government claims these traders conducted business without a valid license from 2021 to January 2024.

The case is ongoing, with both sides presenting their arguments. It’s hard to say how long this will take, but it looks like it will be a lengthy process before the High Court reaches a decision.

This lawsuit could set a significant precedent for those offering peer-to-peer (P2P) over-the-counter (OTC) services. If the traders are found guilty, this case may establish penalties for engaging in illegal activities.

Moreover, Nigeria is known for being one of the top adopters of USDT and Bitcoin, according to Chainalysis data. This lawsuit may complicate the landscape for businesses dealing in digital assets.

These developments are not surprising for those following Nigeria's regulatory environment. The government is trying to defend the Naira, which is struggling against the US Dollar, while also fostering a supportive atmosphere for digital assets.

However, until there’s a clear distinction between Bitcoin and the broader digital asset market, we may see more regulatory actions like this. It’s essential for stakeholders to engage with regulators to seek a more favorable outcome for everyone involved, including the government.