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 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.
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