Top Court in Nigeria Freezes Accounts of Fintechs

In a move that will cause waves in Nigerian fintech, the Federal High Court in Abuja has given orders to freeze the accounts of Rise Vest Technologies, Bamboo Systems, Chaka, CTL and Trove Technologies. 

The accounts are to remain frozen for a period of six months, after Nigeria’s top court acceded to the request of the Central Bank of Nigeria (CBN). Reports indicate that Apex Bank is worried over “illegal foreign exchange transactions” by these fintech companies. The CBN has also claimed, reports say that “they (fintechs) are responsible for making the Naira weaker to US dollars.”

The charge of “illegality in forex” is particularly baffling as only last month Chaka got its license from the Nigerian Securities and Exchange Commission (SEC). Its license is significant as it was the first digital broker license to be granted by the regulatory authority.

Reports indicate that CBN holds the fintechs to have engaged in serious infractions in connection with forex transactions; and have violated its rules and the Foreign Exchange Act.

This curb on fintechs by CBN comes in the wake of its move earlier this month to ban forex sales to money changers i.e. Bureau De Change operators. In its allegation, CBN has accused fintechs of getting forex via Bureau De Change Operators, transferring cash deposits upwards of USD 10,000 and cryptocurrency trading.

Rise Vest CEO Eleanya Eke came out on Twitter on Tuesday to assure users that their “investments and funds are safely managed, funding and withdrawals will continue to be processed as normal.” Eke also said Rise Vest would engage with regulators to sort out this issue. 

Financial advisors say, “that there is no need to panic – as if one has invested via these fintechs – the money is most likely in securities held by a foreign company.”