The Central bank of Nigeria (CBN) has reportedly secured an order to freeze bank accounts of fintech and investment platforms, Bamboo, Risevest, Trove and Chaka for “illegal foreign exchange transactions.” This hold on their accounts will last for 180 days (6 months).
HOW DID THE CBN GET THE GO AHEAD TO FREEZE THEIR ACCOUNTS?
The CBN got an ex-parte motion (essentially, a favorable judgement without the other party(ies) being present in court) from a high court in Abuja ruled by Justice Ahmed Mohammed when the banks lawyer, Michael Kaase Aondoakaa (SAN) claimed that the startups “are engaged in illegal foreign exchange transactions, accessing/procuring of foreign exchange via their banks from the Nigerian foreign exchange market via several bureau de change, international money transfer operators and have transferred cash deposit of more than $10,000 (Ten thousand dollars) to various accounts overseas contrary to provisions of extant laws and regulations and also traded in foreign securities and cryptocurrencies in contravention to CBN Circular referenced TED/FEM/FPC/GEN/01/012 and BSD/DIR/PUB/LAB/014/001 dated February 5, 2021, and July 01, 2015.”
WHY DO THEIR ACCOUNTS HAVE TO BE FROZEN FOR THAT LONG?
According to The Whistler, Aondoakaa told Justice Ahmed Mohammed that the foreign exchange deals done with the defendants was part of what was making the Naira weaker to the United States dollar, hence, the need to block 15 of their accounts for about 180 days pending the outcome of investigation and inquiry conducted by the CBN. This submission from the CBN came before the adjournment of the case, ruled upon by the judge for February 2022.
The judge also advised that any person who feels aggrieved about the freezing order is entitled to approach the court within the 180-day period to seek redress.
WHAT ARE THE PLATFORMS SAYING?
So far, only Risevest and Bamboo have reacted to the decision by the CBN, sending a message to their users and allaying their fears.
As of now, little is known of the damage this order from the CBN has caused or will cause the fintechs, but many are of the opinion that fintechs are not out of the woods yet when it comes to the CBN and its many regulatory policies.