Daily fraud update: 18th February

Chris Lee

Nigerian regulator reveals amount of confiscated Ponzi-related assets

A regulator in Nigeria has confiscated assets worth a significant sum of money which it says has come from Ponzi schemes.

The Nigerian Securities and Exchange Commission (SEC), which is not to be confused with the US regulator of the same name, said that it had seized assets worth around 2.35bn Nigerian naira.

This is equivalent to around £4.9m or $6.4m.

It is believed that just under half of this value was in bank accounts, while a little more was in property.

According to the Commission, some of those accused of being behind the schemes have been protected or convicted.

According to the SEC, the level of activity of Ponzi schemes in place in the country is getting higher and higher.

There was a particularly noticeable rise over the course of 2019.

It is understood that the Commission intends to focus in particular on forex trading when it proposes rule changes this year.

According to the press in the country, other areas of the finance sector which will be covered by this will include margin lending and crowdfunding.

In a statement, the Acting Director-General of the SEC Mary Uduk said that her organisation would persist with tackling this sort of crime.

“We will continue to combat ponzi schemes this year”, she said.

“We intend to continue leveraging on the Memoranda of Understanding that were signed between the Commission and key stakeholders like the Nigeria Financial Intelligence Unit (NFIU) and the Economic and Financial Crimes Commission (EFCC) to strengthen our ability to do this”, she added.

She also said that a “zero-tolerance” approach was likely to be taken.

“The Commission will continue to adopt a zero-tolerance policy on unethical practices by in the capital market with a view to promoting a culture of compliance and enhanced reporting”, she said.

“We will adopt a more proactive inspection and market surveillance regime to nip unethical practices and misconduct in the bud.”

“We shall be referring more cases of infractions for hearing before the SEC Administrative Proceedings Committee”, she added.

Trans-fee crypto exchange suspends trading

A cryptocurrency exchange which is known for using a so-called “trans-fee mining” model has announced that it will suspend both trading and withdrawals.

FCoin said that it was no longer be able to let withdrawals go ahead because it had seen its reserves plummet by 7,000 or more bitcoin.

The firm, which is a crypto exchange, is known for having participated in trans-fee mining.

This involves encouraging trading to occur through the use of its own token – a practice which has led some in the crypto press to accuse it of being a “disguised ICO”.

In a statement posted on the website Reddit, the founder of the firm – Zhang Jian – shared more details about why the processes had been suspended.

He confirmed that there was no “external hacking” involved.

Chris Lee

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