When Nigerian Bitcoin Traders Weep Over Paxful

When Nigerian Bitcoin Traders Weep Over Paxful

Nigerians have taken the Estonia-based Paxful to EFCC (Economic and Financial Crimes Commission), a financial crime buster, for freezing and suspending their accounts on the cryptocurrency exchange where they trade Bitcoin and other cryptos. There is nothing new here I must write: when you sign-up to trade a currency that is out of bounds to any regulator, unconstrained and unbounded, as you want freedom from central banks, you should expect anything.

The shame here is that people that believed that cryptos give freedom from governments are now running to governments for help. That has been my concern on cryptocurrency: it is rigged against the small people. Despite the “decentralization” promise, I am not aware of any major miner in Africa simply because this is a technology game where the best wins. You might have decentralized Terms of Service but you did not decentralize technological capabilities and access. That Paxful is deactivating accounts is expected in this sector because it answers to none: the Securities and Exchange Commission (SEC) Nigeria does not regulate it!

It said, “A few days ago, our organisation was approached by some Nigerians who complained bitterly that Paxful Incorporated, the company that owns the online cryptocurrency trading and exchange platform, ‘https://paxful.com’ has been ripping them of their life investment in cryptocurrency by suspending their accounts, deactivating their wallets and refusing to return the value in their accounts to them even after investigation and finding that they were not involved in any fraudulent activities.”

The petition disclosed that the digital currency trading firm generated over $20 million profit in 2018, adding that its Nigerian customers provided 40 per cent of the revenue from trade in Bitcoin, Ethereum, Litecoin and others.

[…]

Olanrewaju said, “We have about three million Nigerians trading on Paxful platform and they accounted for 40 per cent of its revenue. Despite this, the leadership of the firm was always referring to Nigerians as scammers. I once challenged the Managing Director, Ray Youssef, for referring to us as scammers on an online forum.

“Paxful allowed all kinds of illegal trading because it was making profit from them. They even allowed Nigerians and other nationals to sell iTunes and Walmart cards in spite of the fact that these cards cannot be exchanged in Nigeria.”

[…]

“All accounts that have been shut down have a reason for it. We will not shut down any account unless they violate our TOS (Terms of Service),”  an emailed statement from the company said.

When contacted, the acting EFCC spokesman, Tony Orilade said, “Based on the acknowledgement stamp on the petition, I can confirm that we have received it and we would investigate the allegations.”

I hope Nigerian government through the Central Bank of Nigeria and EFCC will help them from Paxful. But I will expect Central Bank of Nigeria to give these Nigerians a document to sign. In that document, it should write:

“I believe in public regulation of markets. Trusting central banks is better than trusting one guy in a room in Estonia or Russia or America to create my money, build systems for trading the money, and become a regulator of my real Naira. I understand that I am stupid, after MMM, to trust these companies with no operations in Nigeria to do the right things always. The Nigerian government will charge me 90% for all recovered monies since any recovery effort will be funded from the public accounts of the Nigerian people.”

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You never appreciate the usefulness of legal instruments or why we need governments, until you run into trouble…

Freedom comes with responsibility, but hence it’s impossible for all humans to behave well, no matter how well you choose to treat everyone; it becomes necessary to put checks in place, to minimise chaos.

To have over three million Nigerians trading cryptos, in the same economy that appears to be having liquidity issues says a lot about how average people’s mindset is. We all want to make large sums of money, without products and services, no identifiable value creation.

And now the “decentralised” platform appears to have been ‘centralised’ from one corner of the world; forcing victims to run to the very people they have been fighting to avoid…

Always know what you are wishing for, there is more pain on the other side.

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