Two Nigerian crypto companies, Paparaxy Global Ventures Limited and Lemskin Technologies Limited have agreed to refund a sum of 160 million naira to the Nigerian federal government. over unauthorised USDT transactions in the country This is according to a Nairametrics report on Monday.
The two companies made this decision following an earlier indictment for conducting financial transactions, which include USDT/NGN trading, without possessing a valid license to operate.
Recall that last month, Technext reported that the Economic and Financial Crimes Commission (EFCC) secured an order from the Federal High Court to freeze N548.6 million in bank accounts belonging to suspected crypto users on platforms like ByBit, KuCoin, and others.
This and more are part of actions by the Nigerian authorities to clamp down on what they brand as FX market manipulation on the part of some crypto actors.
Why did the two crypto companies refund N160 million?
According to the report, the refund by the two crypto companies, Paparaxy Global Ventures Limited and Lemskin Technologies Limited was part of a plea bargain arrangement with the country’s anti-graft agency, EFCC.
This is according to exclusive documents seen by Nairametrics and sources familiar with the issue. For clarity, a plea bargain allows an accused person to admit being guilty to a crime in exchange for a lesser conviction.
The two companies were accused of conducting operations of a financial institution, without having a valid license, thereby committing offences between 2021 and January 2024, in charges filed between June and July 2024.
This development followed moves by Nuhu Ribadu, the National Security Adviser to identify and nab alleged money laundering, foreign exchange contraventions, and terrorism financing activities on cryptocurrency exchange platforms operating in the country.
On Monday, the plea bargain deals were announced before Justice James Omotosho of the Federal High Court in Abuja by Ogechi Ujam, the EFCC lawyer. Ujam informed the court that the company had proposed a settlement and that a plea bargain agreement had been formalised.
According to the document, Paparaxy restituted N140 million to the Federal Government, while Lemskin refunded N20 million.
The defendants admitted that not being authorised dealers in the Nigeria Autonomous Foreign Exchange Market, they negotiated cryptocurrency USDT against the Naira with the public and conducted specialised business of other financial institutions without a valid license.
It is important to note that the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act defines any foreign exchange negotiation not permitted by law as an offence.
Also, the defendants acknowledged that contrary to Section 10(3) of the Money Laundering (Prohibition) Act, 2011, they failed to report a single transfer to the Special Control Unit on Money Laundering (SCUML). The defendants restituted the amounts, agreeing that it was part of the benefit they derived from committing the offences.
Read also: Exclusive: Personal data of over 840,000 customers allegedly leaked on loan app, iCredit
Additionally, a part of the plea bargain includes that the directors of the two crypto companies shall depose an affidavit of good behaviour before the Court. Ultimately, Ogechi Ujam, the EFCC lawyer, requested a short date for the adoption of the plea bargain agreement and Justice James Omotoso adjourned the proceedings to October 22.
2024 has been a year of clampdown on crypto companies and users in Nigeria due to the alleged use of digital currencies for terrorism financing and its role in FX market manipulations.
An executive of the largest crypto exchange globally, Binance, has spent 8 months in detention for these reasons and the granting of licenses to a few local crypto exchanges by the Securities and Exchange Commission (SEC) has done nothing to stop the clampdown.
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