In Brief

• EFCC crypto convictions mark a significant anti-fraud milestone, beginning with the sentencing of two Chinese nationals linked to a foreign crime syndicate.

• Over 800 arrests and 146 prosecutions highlight Nigeria’s urgent crackdown on digital asset crime amid rising crypto adoption.

• These convictions align with AML/CFT frameworks, Nigeria’s new digital asset laws, and FATF pressure for regulatory reform.

Nigeria’s crypto ecosystem has come under intense scrutiny, forcing its Economic and Financial Crimes Commission(EFCC) to double its efforts in preventing crypto fraud.

Thus, the EFCC crypto convictions have progressed, with the body sentencing two Chinese Nationals for cyberterrorism and internet fraud aimed at leveraging on the anonymity of digital assets.

Huang Xiao Liang (aka Liu Xiao Liang) and Shi Yang Xiong are first among many more convicts as the nations tried to clean their infested crypto ecosystem.

Nigeria’s Battle Against Digital Asset Crime

Nigeria is Africa’s leading Web3 ecosystem, housing the region’s largest crypto trading volume and blockchain developers.

Ironically, its success has attracted various bad actors, becoming Africa’s leader in digital assets crime.

In response, its government intends to tighten its legal belt, preventing any culprits from escaping.

This is seen with the recent EFCC crypto convicts, where two individuals, part of a 792-member syndicate dismantled during the December 2024 “Eagle Flush Operation,” were sentenced to one year in prison and fined ₦1 million($700).

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The court has ordered their immediate deportation upon completing their jail terms and the forfeiture of recovered sets to the Federal government.

Upon thorough investigation, the EFCC confiscated computer systems, which revealed the convicts intended to “destabilize and destroy the economy and social structure of Nigeria.”

While Nigeria is still grey-listed by global FATF standards, this swift act of justice showcases the EFFC’s commitment to intensifying its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) drive.

Part of a Broader AML/CFT Crackdown

Before the recent pro-crypto initiatives, most African governments feared its capability, more so its anonymity.

This was in good measure since money laundering and evasion of tax is mere child’s play for most digital assets.

In retaliation and response to changing tidings, Nigeria is on an intensive crackdown to bring Designated Non-Financial Businesses and Professions (DNFBPs), particularly crypto asset businesses, under strict regulatory compliance.

Many might view it as a means to stifling growth, but in Africa, it’s a necessity to prevent such scenarios from occurring frequently.

Additionally, Nigeria faces international scrutiny over its crypto sector. The region currently ranks among the top 5 countries actively adopting digital assets, but its regulation requires a major workaround.

Recently, the IMF released documents citing how if Nigeria doesn’t shape up its regulatory framework, money launching will be the least of their problem.

This particular case is a response to growing concerns over digital asset crime, with the EFCC crypto convictions seeking to uproot any foreign influence driving degeneracy.

According to the court details, the EFCC had 194 foreign nationals in custody in 2024, prosecuting 146 for crypto-enabled financial crimes.

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Regulatory Shifts and Heightened Vigilance

Protecting investments from crypto scams in Nigeria is now a necessity, with the regions showcasing high adoption rates.

The tokenization of real-world assets and the introduction of digital assets within traditional financial institutions are some of the use cases currently dominant within the region.

The executive chairman of the EFCC, Ola Olukoyede, hinted at the demand for accountability from the user end.

“Understanding virtual assets and investment fraud will not be complete without drawing serious attention to the role of investing public in breaking the opportunistic practices of fraudsters floating various schemes to defraud Nigerians.”

Olukoyede referenced the infamous CBEX scam, which ironically revived quite recently.

He added:

“Investment fraud, like virtual assets fraud, is spreading like wildfire across Africa… Every exploitation of investors in any guise is considered a fraudulent act.”

Currently, Nigeria’s SEC has regulatory oversight over digital assets after the recent Investment and Securities Act was passed, classifying them as securities.

Emomotiti Agama, Director General of the SEC, stressed how the agency intends to quell the growing rise of crypto scams in Nigerians using investor education, tighter regulatory frameworks and a mutual understanding between providers and regulators.

The EFCC crypto convictions showcase how fraud is no longer an unspoken plague ravaging Nigeias’ bustling ecosystem.

A Region Cleansing Its Digital Landscape

There is a 45% surge in financial fraud cases, with 70% of losses linked to digital channels, including unregulated virtual asset platforms.

Ponzi Schemes these days opt for crypto as a safer option, luring unexpecting individuals. The EFCC has stepped up through decisive enforcement, taking down any suspicious entities.

Nigeria already has the volume, the developers, the interest and, recently, the regulation. All it needs is to sweep out any entities fostering digital asset fraud.

The case of foreign operatives does pose an interesting question but also shows how much potential Nigeria has.

However, the case against a crypto scam is a clear declaration: Nigeria is cleaning the house, better adhere to face jail time.