Anti-graft and financial regulators have alerted to the proliferation of fraud schemes in the country’s expanding virtual asset space.
Speaking at a forum in Lagos: “Understanding Virtual Assets and Investment Fraud,” top officials from Economic and Financial Crimes Commission (EFCC) and Securities and Exchange Commission (SEC) called for heightened vigilance, deeper education, and stronger inter-agency collaboration to combat digital finance-related criminality.
EFCC Chair, Ola Olukoyede, represented by Zonal Director, Michael Nzekwe, described the influence of virtual asset fraud as a major threat to financial security and national development in Africa.
“Africa continues to be assailed by corruption in diverse ways. The issue of illicit financial flows is a challenge to African development, with annual losses running into billions of dollars,” he said.
While money laundering is the most significant of these crimes, Olukoyede warned that virtual assets and investment scams are emerging as an equally dangerous frontier.
“Virtual assets are not fundamentally criminal. It is when they are wrongfully or fraudulently used that they become criminal. Fraudsters are evolving ways of perverting their genuine purposes,” he noted.
He said virtual assets—digital representations of monetary value that operate on blockchain, including cryptocurrencies and tokens—are exploited by corrupt politicians, and others to hide illicit wealth and avoid detection.
“Stolen funds and unexplained wealth are warehoused in wallets. Payments for services are made through this window. Investment schemes are also facilitated using virtual assets,” he added.
EFCC, he said, is not overwhelmed by these threats. Instead, the agency is stepping up intelligence, training, and inter-agency collaboration.
“We are ahead in every material sense. There are proofs of operational success, especially breakthrough in the investigation and prosecution of the CBEX scam,” he noted.
He also decried rising investment fraud, particularly Ponzi schemes, which exploit the desperation and limited financial literacy of Nigerians.
“The investing public inadvertently aids these fraudulent practices through a lack of due diligence. Another lesson is that investors hardly send suspicious transaction reports until they are defrauded. No investment scam can succeed without the negligence of investors,” he said.
He called on participants and the wider public to take advantage of forums like this to gain deeper knowledge and understanding of virtual assets, urging experts present to help close the “window of ignorance” that fraudsters exploit.
Addressing participants, Kaina Garba, Assistant Commander II of EFCC, emphasised the urgent need for awareness in navigating the complex world of cryptocurrencies and virtual asset service providers (VASPs).
“Virtual assets are digital representations of value — including cryptocurrencies like Bitcoin and Ethereum — that can be traded online or used for investments. However, these technologies have also become tools for fraudsters to exploit unsuspecting citizens,” he said.
Garba described how the anonymity and borderless nature of virtual assets have enabled sophisticated scams, including fake token sales (commonly known as Initial Coin Offerings), phishing attacks on digital wallets, and Ponzi schemes disguised as legitimate crypto investments.
One particularly dangerous tactic, he noted, is the use of crypto mixers — platforms that obfuscate the origins of stolen funds by routing them through multiple wallets.
“We are witnessing a rise in schemes that appear legitimate on the surface, but which crumble when investors try to withdraw their funds. Sadly, many only attempt due diligence after their money is gone,” he cautioned.
Garba called on Nigerians to scrutinise the legitimacy of virtual asset platforms and confirm their registration with regulators such as the SEC.
He warned that while Nigeria is opening its doors to innovation in digital finance, the risk of criminal infiltration has also expanded.
To combat this, Garba noted that the EFCC has stepped up training, digital forensics, and partnerships with local and international bodies.
She also advocated for embedding digital finance education in schools, NYSC camps, and community outreach programmes.
“The goal is to ensure that the next generation is informed, cautious, and empowered,” he said.
Speaking on behalf of the SEC, John Atila, a representative of the Commission, reiterated the regulator’s two-pronged approach to investor protection and market development as enshrined in the recently passed Investment and Securities Act (ISA) 2025.
“This Act gives the SEC the clear mandate to regulate and supervise the digital asset space,” he said. “Our approach includes incubation programs for prospective operators and a strict verification system for exchanges and crypto platforms.”
Atila stressed that registration remains the hallmark of credibility for any virtual asset business.
“If we don’t know your business, we cannot regulate it. Every platform, instrument, and promoter must be registered with the Commission before they are allowed to operate,” he said.
Referencing the now-defunct crypto platform CBEX, Atila noted that the lack of proper registration made enforcement and investor redress extremely difficult.
Buchi Okoro, CEO of the crypto exchange Quidax, highlighted the evolving nature of financial crimes and the responsibility of all stakeholders to stay vigilant.
“Gone are the days of bank robbers with dynamite. Today, the crime scene is digital. We must all work together — law enforcement, regulators, service providers, and the public — to safeguard the financial ecosystem,” Okoro remarked.
He praised the ongoing efforts of the EFCC and SEC in promoting education and building institutional capacity, but added that user responsibility and continuous learning were just as crucial in a rapidly changing industry.
Speakers warned that as digital finance continues to integrate into everyday life, the threats posed by fraudulent actors will grow in complexity and impact. Already, the EFCC has reported a sharp increase in cases of online investment scams, with many targeting youths and first-time investors.
