Nigeria’s Central Bank Freezes Accounts of 4 Major Fintech Platforms

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Image sourced from Reuters.

The Central Bank of Nigeria (CBN) has sought to freeze the bank accounts of four major Nigerian fintech platforms, namely Risevest, Bamboo, Trave and Chaka.

These four platforms will have their accounts frozen for the next six months, according to Tech Cabal, for the purpose of probing the dealings of the online investment and trading platforms where most of the trading is happening online.

An ex parte motion, a motion for orders that can be granted without waiting for a response from the other side, ie. the fintech platforms, was granted by the Federal High Court in Abuja.

The motion ordered the temporary freezing of the bank accounts and was filed by Chief Michael Kaase Aondoakaa, on behalf of the CBN’s governor.

The Central Bank is alleging that the platforms – Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Chaka Technologies Limited and Trove Technologies Limited – were complicit in operating without licenses as asset management companies and for “utilizing FX sourced from the Nigerian FX market for purchasing foreign bonds/shares” in contravention of a circular issued by the CBN itself.

Aondoakaa told Justice Ahmed Mohammed of the Federal High Court that the foreign exchange deals being performed by the platforms were making the Naira weaker to the US dollar, hence the need to block 15 of their accounts for a period of about 180 days.

Risevest’s CEO Eke Eleanya Urum and Bamboo have both responded on Twitter (which is currently banned in Nigeria) to the announcement, assuring customers that trading is to continue like usual.

We'll engage with regulators as we always have to ensure that any issues raised are dealt with properly. But this does not impact or affect our users or their investments which are managed via regulated third parties across all jurisdictions we operate. Thank you very much. ❤️🚀

— Indaboski of Investing 🚀 (@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

So far none of the affected companies has come out to refute the claims made by the CBN, which is another drastic action taken by the CBN in its further crackdown on Forex deals in the country.

Why the Central Bank of Nigeria is Cracking Down on Forex Sales

Last month, the CBN banned the sales of foreign exchange (FX/Forex) to Bureau De Change (BDC) operators in Nigeria. The registration of new BDC operators was also halted immediately.

According to Godwin Emefiele, governor of the Central Bank, many BDC money exchangers in Nigeria had recently become wholesale dealers and had been illegally trading FX to the tune of millions of dollars per transaction. The Bank fears that over-selling of illegal FX is weakening the country’s currency.

“They have turned themselves away from their objectives,” Emefiele said. “They are now agents that facilitate graft and corruption in the country. We cannot continue with the bad practices that are happening at the BDC market.”

“We will deal ruthlessly with Nigerian banks that deal with illegal BDCs and we will report foreign organisations patronising them,” Emefiele said.

By Luis Monzon
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