CRYPTO FRAUD: NIGERIA TIGHTENS LEGAL NET AS VICTIMS CHASE STOLEN FUNDS

• Nigeria’s expanding digital-asset laws are opening new routes for victims of crypto scams and Ponzi schemes to trace, freeze and pursue recovery of stolen funds, even as cross-border transactions complicate enforcement.

Victims of cryptocurrency fraud in Nigeria are no longer limited to criminal complaints, with regulatory, civil and asset-recovery mechanisms increasingly available to pursue operators and trace suspected proceeds.

A Legal 500 analysis by Syntegral Legal Practice said Nigeria’s legal framework has evolved significantly following the enactment of the Investments and Securities Act 2025, which gives the Securities and Exchange Commission broader authority over virtual assets, digital-asset exchanges and related market participants.

The analysis said the framework now operates alongside the Money Laundering (Prevention and Prohibition) Act 2022 and the Cybercrimes Act, as amended in 2024, providing mechanisms for investigating suspicious transactions, electronic fraud and the movement of criminal proceeds.

For victims, the potential remedies extend beyond criminal prosecution. Civil proceedings can seek preservation of bank accounts, digital wallets and other identifiable assets. Courts may also grant disclosure orders against intermediaries where information is needed to identify wallet holders or trace transactions.

Asset tracing is particularly important because blockchain transactions leave a transaction record even when the identity behind a wallet is not immediately known. The analysis noted that tracing can become more difficult where funds move through multiple wallets, exchanges and jurisdictions.

The Legal 500 article also highlighted the Proceeds of Crime (Recovery and Management) Act 2022 as part of Nigeria’s asset-recovery framework, including mechanisms for managing recovered property and potential victim reparations.

The regulatory shift follows a series of high-profile digital-asset failures and alleged Ponzi schemes. The analysis cited the CBEX collapse as a major example, with reported losses and victim estimates varying widely depending on the methodology used.

For investors, the compliance lesson is increasingly direct: verify whether a platform is authorised, preserve transaction records immediately after a suspected fraud and report suspicious activity quickly.

For regulators, banks, exchanges and enforcement agencies, the bigger test is whether the legal powers now available can be converted into rapid asset tracing, freezing and recovery before stolen crypto moves beyond the reach of investigators.