In a move aimed at curbing illicit financial activities, the Economic and Financial Crimes Commission (EFCC) announced on Tuesday the freezing of approximately 300 suspected illegal forex accounts operating on a peer-to-peer platform.
The chairman of the EFCC, Ola Olukoyede, disclosed this during an interactive session with journalists in Abuja, revealing that the accounts were suspended following a court order issued on Monday.
The action comes amidst growing concerns that the administration of President Bola Tinubu is mirroring its predecessor by clamping down on crypto activities and foreign exchange rate aggregators. This crackdown is fueled by allegations that such activities contribute to the depreciation of the naira in the foreign exchange market.
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Olukoyede said the “P to P” (peer-to-peer) financial trading scheme poses a severe threat to the stability of the naira, operating beyond the oversight of official banking channels. He further disclosed that over $15 billion had passed through one of these forex platforms within the last year, operating outside of financial regulations.
Olukoyede justified the EFCC’s intervention as a measure to safeguard the foreign exchange market and protect the economy, noting that recent efforts have helped bolster the weakened naira. He warned that failure to intervene swiftly could have led to another crash in the forex market within a week.
“Over 300 accounts in illicit forex trading would have led to another crash in the next one week if we hadn’t moved in quickly,” Olukoyede stated, highlighting the urgency of the situation. He expressed frustration at individuals who derive pleasure from seeing the country in turmoil, emphasizing the need for concerted efforts to combat economic sabotage.
“We got an order to freeze those accounts. Somebody would come and asked us ‘what is your business with forex transactions? Some people are happy; they take pleasure in seeing this country boiling and I’ve come to realise that in the course of this work, some people want to see things go bad! From bad to worse,” he added.
The move follows the recent depreciation of the naira in the forex market, dropping from N1120/$1 to N1300/$1, creating room for speculation and exacerbating concerns about the currency’s stability.
In agreement with Olukoyede’s assertion, Aminu Gwadabe, president of the Association of Bureau De Change Operators of Nigeria (ABCON), affirmed the commitment of BDC operators to prevent speculators from undermining the naira.
“People have turned dollar to be an asset; to be a commodity of trade that is why those platforms continue to thrive. We have seen where people are buying dollars into their domiciliary accounts to finance these schemes. A lot of millions of dollars are going out from the system. It is one USD to one USDT. The market can be liquid,” he said.
He outlined measures taken by ABCON, including the establishment of state chapters for data repository and collaboration with regulatory authorities for enhanced oversight.
Gwadabe underscored the need for harmonization, centralization, and Know Your Customer (KYC) protocols in the foreign exchange market to identify and regulate all participants effectively. He likened the activities of P2P platforms to Binance, which was accused of facilitating illegal forex trading, and called for concerted action by regulatory agencies to address these threats.
Mr Gwadabe explained, “I am happy that the authorities, and even the BDCs as operators, have identified the peer-to-peer (P2P) platform. The P2P is a platform like Binance, where speculators use the dollar to buy USDT, a stablecoin that is pegged at one to the dollar.
“As long as Binance and such other platforms continue to be profitable, the naira will continue to depreciate. There are many of them in the system. Binance has been nipped in the bud, but there are still many. They are online platforms with no registration, no restrictions.”
The Central Bank of Nigeria (CBN) had previously compelled Binance, the world’s largest crypto exchange platform, to largely exit Nigeria following regulatory pressure. Following these measures, critics argue that suspending P2P accounts may not effectively address the root causes of the naira’s depreciation, citing past unsuccessful attempts by the CBN.
Economists have attributed the free falling of the naira to insufficient dollar liquidity, emphasizing the need to increase FX earnings through exports to stabilize the currency.