Nigerian cryptocurrency investors who use peer-to-peer (P2P) services have expressed their concerns over the Central Bank of Nigeria (CBN) flagging their bank accounts. The reason for CBN’s decision to flag accounts is believed to be related to the nearly $6.3 million (2.9 billion naira) Flutterwave hack. However, the bank accounts that have been flagged have yet to be proven to be affiliated with the hack.
Local news sources report that on February 19, 2023, Albert Onimole, the legal counsel for Flutterwave, a Nigerian fintech company, reported a case to the Deputy Commissioner of Police in Yaba, Lagos. He alleged that almost $6.5 million (3 billion nairas) had been illegally transferred from the accounts of his client.
On February 27th, a motion ex-parte was filed and granted in support of Flutterwave’s claims. According to the motion, 107 accounts, including their fifth beneficiaries, will be put on lien/Post-No-Debit (PND). So far, some locals have confirmed that their accounts have been frozen in connection to the hack.
The situation has caused some P2P users to avoid interacting with various over-the-counter (OTC) markets that allow the trading of securities between two counterparties outside of formal exchanges and without the supervision of an exchange regulator. This is because the hacked sum flowed into the Nigerian crypto market on different OTCs, and users now face issues with financial intermediaries when they want to use P2P services for crypto transfers.
P2P is a medium used by investors worldwide to exchange crypto directly between parties without involving a central authority. They may choose to swap cryptocurrencies for cryptocurrencies or crypto for cash. In 2021, the CBN announced regulations that prevented financial institutions like banks from enabling crypto use. However, Nigerians have still maintained their leading position as Africa’s largest crypto hub through the use of P2P platforms.
Impacts of the move to crypto users
Some community members believe that the current situation could impact the general interest of Nigerians who are yet to join the crypto digital ecosystem in acquiring digital assets. A concerned Nigerian noted that this situation is causing some businesses to crumble because unsuspecting entrepreneurs have received payments for their services with funds allegedly linked to the hacked amount.
Despite the CBN’s strict crypto regulations, the P2P market has been beneficial for Nigerian trade. However, a financial analyst called Sadeik regards it as a black market hub for scammers laundering fraudulent funds. Sadeik’s friend lost over 500,000 because the person he transacted with had their account flagged in the Flutterwave hack.
In an official statement, Flutterwave denied the hack and said it identified an unusual trend of transactions on some users’ profiles. The company immediately launched a review in line with its standard operating procedure, which revealed that some users who had not activated some of their recommended security settings might have been susceptible. The statement adds that Flutterwave was able to address the issue before any harm was done to its users.
