Nigeria’s SEC vows to crack down on unlicensed exchanges

Nigeria’s Securities and Exchange Commission (SEC) has pledged to crack down on any unlicensed digital asset exchange, days after licensing the country’s first two exchanges.

The regulator recently issued a statement warning exchanges to play by the rules, with chairman Dr. Emomotimi Agama reiterating the commission’s commitment to protecting investors.

The SEC issued its first-ever exchange licenses to Busha Digital and Quidax this month, paving the way for a new chapter of digital asset regulation in Africa’s biggest economy. It marked a remarkable shift from the vicious crackdowns that the Nigerian government started the year with, which led to the shutdown of offshore exchanges like Coinbase (NASDAQ: COIN) and Binance and the arrest of the latter’s executives.

“We are certainly going to commence enforcement actions on anyone who wants to operate in this market and does not have the intention of being regulated,” Agama said in a statement released to local media outlets.

“We are sending this signal to all those who want to play by the books that they are welcome to our space. But for those that do not want to play by the books, of course we definitely will not allow them to operate within our space.”

Agama added that the licenses were long overdue as the Nigerian youth have continued setting the pace in Bitcoin adoption despite the regulatory hurdles.

Indeed, Nigeria has been a trailblazer in the digital asset space. A Chainalysis study published on Wednesday ranked it second for adoption globally, only losing out to India, which has held the top spot for two consecutive years. It was the only African nation in the top 20, with other perennial inclusions like Kenya falling off over the past year.

“All this we seek to do without hindering innovation because part of our primary responsibility as the SEC is market development and we are aware that Mr. President is very interested in youths and the activities of youths,” Agama stated.

The SEC’s tough talk has been welcomed by some in the digital asset space who believe a cleanup is long overdue. Digital asset analyst Rume Ophi told one local outlet that this approach could have prevented thousands of Nigerians from losing millions when the likes of FTX collapsed.

In the past, the SEC has claimed that a key reason behind its crackdown on exchanges has been rampant crime, including money laundering and scams, that have targeted Nigerian investors. However, all this has taken the backseat this year, with currency manipulation becoming the primary reason for the government’s crackdown.

$330,000 in KuCoin and Bybit customer funds frozen

While the SEC pledges to clamp down on unregulated actors, the country’s financial crimes tsar is already showing its teeth.

The Economic and Financial Crimes Commission (EFCC) recently secured a court order to freeze N548.6 million ($330,000) in bank accounts operated by digital asset owners on platforms like Bybit and KuCoin. The agency has long held that these exchanges are guilty of manipulating the price of the naira, which led to their shutdown earlier this year.

“Bybit is a cryptocurrency platform where the exchange of USDT (a digital dollar) to other currencies, including the naira, takes place. One USDT is approximately equivalent to one United States dollar (USD). The exchange rates determined by users of these cryptocurrencies adversely affect the value of the naira by artificially lowering its value,” one EFCC investigator said in a court filing.

It’s not the EFCC’s first ‘crypto’ enforcement this year. The agency was responsible for the arrest and prosecution of Binance executive Tigran Gambaryan, who’s still being held in an Abuja prison for crimes allegedly committed by the exchange.

Pleas from United States Congressmen for the State Department to intervene have failed to secure his release. Gambaryan appeared frail in his recent court hearing, where his legal team argued that he should be released on bail to pursue medical assistance.