Nigerian government freezes billions in cryptocurrencies

Despite claims by the Nigerian government that it has frozen significant funds linked to sponsors of the #EndBadGovernance protests, some cryptocurrency wallets linked to the movement appear to still be active.

83 Billion Nigerian Naira Worth of Cryptos Blocked

On August 13, National Security Advisor (NSA) Nuhu Ribadu announced at a meeting of the Council of State that the government has frozen 83 billion Nigerian naira (approximately $52 million) in cryptocurrencies and fiat currencies. The funds are believed to have come from protest sponsors. This includes 78 billion naira ($50 million) in cryptocurrency, with 59 billion naira ($38 million) believed to be frozen in four wallets. An additional 4 billion naira ($2,540) is believed to have been contributed by political actors from various regions, including Abuja, Kano, Kaduna and Katsina.

However, a local media scan of the wallet addresses revealed discrepancies. Despite the government’s claims, some wallets continued to transact or show incorrect balances. For example, one wallet was reported to have a balance of 1.5 million naira ($967), when upon inspection it was found to contain only 270,796 naira ($172). Another wallet, which reportedly contained 698 million naira ($443,512), was found to contain only 367 million naira ($233,574), according to blockchain data.

Questions about the effectiveness of the measures

The affected wallets, which can be traced back to the KuCoin and MEXC exchanges, continue to actively send and receive funds, raising questions about the effectiveness of the government’s measures. One notable transaction involved the transfer of 78 million naira ($50,000) to an unknown wallet, with the funds quickly moved to another address.

While the identities of the wallet owners have not been made public, it is possible that the exchanges hosting these wallets shared information with authorities. Local media reported that a crypto forensics expert explained that the government could approach an exchange to assist in an investigation if the proceeds of crime are in a wallet. However, the expert added that exchanges are not obligated to comply with such government requests unless there is a substantial legal basis.

Investigation into money laundering and terrorist financing underway

The Economic and Financial Crimes Commission (EFCC), which requested the freezing of the wallets, is investigating the funds for alleged money laundering and terrorist financing. The continued activity in these wallets highlights the challenges governments face in regulating and monitoring cryptocurrency transactions. Blockchain technology offers a degree of anonymity and decentralization, making it difficult for authorities to effectively track funds and enforce freezes.

The #EndBadGovernanceInNigeria protests were supported by the Nigerian cryptocurrency community, which called for reforms that would benefit the industry and the broader economy. However, the ongoing developments raise questions about the effectiveness and transparency of government measures against this protest movement.