Nigeria’s Court Freezes Bank Accounts of Chaka, Bamboo, RiseVest, Trove, etc on CBN Request

Nigeria’s Court Freezes Bank Accounts of Chaka, Bamboo, RiseVest, Trove, etc on CBN Request

A federal court in Abuja has frozen the accounts of 6 online investment firms. The companies are Bamboo Systems Technology Limited, Rise Vest Technologies Limited, Bamboo Systems Technology Limited OPNS, Chaka Technologies Limited, CTL/Business Expenses, and Trove Technologies Limited. The Central Bank of Nigeria (CBN) has requested for the freeze to enable it conduct forex related investigations on the companies: “The CBN now accuses the companies of engaging in “illicit forex transactions”. The freeze will remain till Feb 2022. These firms help Nigerians buy foreign stocks, bonds and other financial securities.

The Central Bank of Nigeria (CBN) has secured a court order to freeze the accounts of some fintech companies for 180 days. The Federal High Court in Abuja granted the prayer of the apex bank to put the financial activities of the investment firms on hold pending the conclusion of its investigation into their alleged forex misconduct.

The companies include Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Bamboo Systems Technology Limited OPNS, Chaka Technologies Limited, CTL/Business Expenses, and Trove Technologies Limited.

The court document reveals that the financial regulator is investigating ‘illegal foreign exchange transactions’ by the affected companies, which is weakening the naira.

If you look at it, the apex bank thinks they could be weighing on the value of Naira against dollars since technically they are importing “foreign financial products” into Nigeria thereby re-adjusting Nigeria’s balance of payments.

This does not look good at all for the startups.

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The Companies React

Bamboo: “We’re aware of the recent reports about us. Our legal and government relations teams are looking into it but we thought it was important to let you know that your money remains safe with Bamboo and will always be readily accessible.”

 Risevest: “About the latest news about us and our FX dealings, you can be sure that your investments and funds are safely managed, that funding and withdrawals will continue to be processed as normal, and that our U.S operations remain intact. We will work with regulators, as we always have to ensure that all issues raised are properly addressed. However, this does not affect our users or their investments, which are managed by regulated third-parties in all jurisdictions in which we operate.”

Comment on LinkedIn Feed

Comment 1: CBN has not gone beyond its boundaries. AML/CFT act, CBN act, etc give room for their intervention and regulation. It might be seen in some quarters as being unhealthy for foreign investments but there are many foreign investments coming into Nigeria daily that are not affected. The companies should show that they are legitimate and do not mean to throw spanners into Nigeria’s balance of payment.

My Response:CBN has not gone beyond its boundaries” – that is the problem with Nigeria. I do not actually agree with you on this. Nigeria is a country where people do crazy things to show they have the power. CBN can do all the investigations it wants to do without freezing these firms for 6 months. So, what if they conclude and nothing bad happened? Would they compensate for the reputational damage to the startups? We cannot give excuses when the government is using its incompetence to harm innocent companies and people. 

We like to BAN, SUSPEND, BAN. Tesla would have been suspended if it was trading in Nigeria with Elon Musk leading it. But even in Elon’s way, America continues to find how to work with him because America respects what he does. 

Watch out – these 6 firms will relocate to Estonia, Dubai and Ireland and continue to operate, denying Nigeria the tax receipts. It takes one thing: peer to peer reconciliations.

Comment #2: With respect, there are two things you’re missing, Sir.

One; No one is disputing that the CBN has that power, especially because it was a court, not even the CBN that froze the accounts. That point is moot. The question Prof Ndubuisi Ekekwe is posing is not whether they have the power – it is whether they ought to have used that power the way they did, which is why the post highlighted the potential damage that could be done to the startups over the 6-month period, and the lack of restitution if they are eventually found to be innocent.

Two, your assessment that the people in CBN are only oriented toward control and compliance, and not business development, is a massive problem. They must be BOTH. The purpose of the CBN is not merely to act as police – it must also act as facilitators to stimulate the economy and there are myriad different approaches they could have taken to resolve this in a way that doesn’t damage the statups involved and by extension, investor confidence in the ecosystem.

They can only regulate and enforce compliance as long as there is a viable economy to do that in.

CBN Freezes Some Fintech Firms’ Accounts, Raising Concerns About The Future of Nigerian Startups

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5 thoughts on “Nigeria’s Court Freezes Bank Accounts of Chaka, Bamboo, RiseVest, Trove, etc on CBN Request

  1. ‘We like to BAN, SUSPEND’ I completely agree with this view Prof. There is nothing wrong with a regulatory or statutory authority protecting the interests of a democratic state, and by inference, its people.
    But what tends to happen in Nigeria is companies under scrutiny suffer the corporate equivalent of a citizen being ‘refused bail’, and this is before they are charged with anything and are still at the stage officially termed ‘helping the police with their inquiries’.
    CBNs quest in the welfare of Nigeria’s balance of payments.is just, but it must realize that what it perceives it saves by pausing activities with capital flight potential, it may lose by damaging businesses which are contributing to the Nigerian economy..

    Reply
  2. It’s one thing to have power, it’s another to know how to use it, we are yet see any institution or individuals here who know how to use power.

    From land border to Twitter, from cryptos to importation, it’s about flexing muscles, with no apparent net gain, and by the time the CBN is done with investigations, who knows the amount of losses in certain quarters.

    Our borrowing is increasing, same goes for our expenditures, while the revenues are decreasing, but in all our superpower posturing and aggrandizement, we haven’t figured out how to grow where it matters most.

    When you want to gain something, you must be willing to lose something else; what do we want to gain and what are willing to lose? We seem to think that we are so special that we cannot lose anything, only gains.

    Dream on…

    Reply
  3. I totally agree that CBN can continue investigation without freezing the accounts. Nigeria has plenty of opportunities in the technology scene, but government appears unable to catch up with the pace of growth.

    The regulatory bodies need to start looking beyond their fears and start seeing the opportunities ahead.

    Reply
  4. Frank Mmadukaihe Jr. · Edit

    I very much anticipated this. It’s quite preposterous. Blocking all legitimate avenues through which the youth could survive having failed in job creation.

    Reply
  5. Are there no other legal activities that could be weighing on the value of Naira against dollars. Does CBN exist to shut them all down? It seems to me that the typical Nigerian regulator exists to choke small businesses. Not good for Nigeria and growth.

    Reply

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