Two crypto firms in Nigeria: Paparaxy Global Ventures Ltd and Lemskin Technologies Ltd are to refund the Nigerian government 160 million Naira for unlicensed USDT trades in the country. For context, the crypto firms had not obtained the required licensing to offer USDT/NGN and other trading pairs.
The ruling to refund the sum follows the Economic and Financial Crimes Commission (EFCC), charging both firms with operating without the required licensing. While both crypto firms engaged in the trades from 2021 to 2024, they violated the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act.
Significantly, the Foreign Exchange Act (1995) highlights that any foreign exchange trade the law does not permit is an offence. Consequently, Paparaxy and Lemskin reached a plea bargain with the government to refund ₦160 million (about $95,000).
The sum was split between the two firms. To clarify, Paparaxy Global Ventures Ltd refunded ₦140 million and Lemskin Technology Ltd refunded ₦20 million for illegal USDT trades in Nigeria.
Regulatory Background
The Paparaxy-Lemskin development is part of an extensive regulatory crackdown on unsanctioned crypto trading in Nigeria. Earlier, the EFCC froze over ₦500 million as crypto assets of some crypto users using a court order.
Significantly, these assets were in the accounts of businesses and individuals suspected of unauthorised foreign exchange transactions involving unlicensed platforms like Kucoin and Bybit.
Implications
The Nigerian government is tightening its grip on the crypto industry highlighting proper licensing and adherence to regulatory guidelines. Accordingly, recent enforcement actions from the EFCC and the SEC demonstrate a commitment to implementing these guidelines.
Overall, the Paparaxy-Lemskin development (both crypto firms refund to the government) warns crypto businesses in Nigeria to comply and obtain the necessary licensing before operating. As exemplified by these 2 crypto firms, defaulting companies will face significant risks including fines, asset freezes and reputation damage.