‘Crypto trading, illegal forex transactions’ — CBN lists ‘infractions’ of Risevest, Bamboo

On Tuesday, the federal high court sitting in Abuja granted the request of the Central Bank of Nigeria (CBN) to freeze accounts belonging to some technology trading platforms offering local and foreign stocks.

In his ruling, Ahmed Mohammed, the judge, granted the prayers of the apex bank to freeze the accounts of RiseVest Technologies Limited, Bamboo Systems Technology Limited, Chaka Technologies Limited, and Trove Technologies Limited for 180 days.

This is not the first time the apex bank is clamping down on major fintech platforms offering foreign stocks to its customers.

In February 2021, the CBN directed banks and other financial institutions to close any accounts dealing in cryptocurrency or facilitating payment for cryptocurrency exchange, with immediate effect.

While delivering the ruling, Mohammed added that any person who feels aggrieved about the freezing order is entitled to approach the court within the period to seek redress.

He then adjourned further hearing till February 20, 2022.

TheCable looks at the various ‘sins’ of the fintech trading platforms, according to CBN.

RISEVEST TECHNOLOGIES LIMITED – NO LICENCE/ALLEGED CRYPTO TRADING

The CBN accused Risevest of engaging in cryptocurrency trading which contravened its circular referenced BSD/DIRUPUB/LAB/014/001, dated February 5, 2021.

“Our review revealed that the company consummated its asset management activities [and] recorded a turnover of N1.8billion between January 1, 2019, and April 27, 2021,” CBN said in a court filing.

“Inflows to the account ware mainly from retail investors through two Payment Service Solution Providers (PSSPs): Flutterwave (N588.81 million) and Monnify (N987.58 million). Outflows from the account were to a PSSP-Paystack (N500.00 million) and cryptocurrency traders like BuyCoins (N110.00 million) and Beltium Ventures (N350.00 million).

“Inquiries on the transactions confirmed that the transfers to Buycoins were for the purchase of cryptocurrency.

“The above is indicative that Rise Vest Technologies Limited traded in cryptocurrencies in contravention of the CBN circular referenced BSD/DIRUPUB/LAB/014/001, dated February 5, 2021.”

BAMBOO SYSTEMS TECHNOLOGY LIMITED – NO LICENCE

The apex bank said Bamboo operates an online app for trading in stocks, exchange-traded fund and derivatives listed in major US exchanges.

“Bamboo Systems Technology Limited is owned by Us-based Bamboo Global LLC (99.99%) and Oluwole Ralph Olugbenga (0.01%). The company was incorporated in December 2018 to carry on the business of software design, implementation, development, maintenance and consultancy amongst others,”

“It is related to One Global Med. Technology. BSTL Lambeth and Grag Concepts Limited.

“Further reviews showed that Bamboo Systems Technology Limited operates an online App. Bamboo, that provides a medium for investors to buy and sell stocks, Exchange traded funds (ETFS), index funds and derivatives listed in major exchanges in the U.S.”

CHAKA TECHNOLOGIES LIMITED / NO LICENCE AND ALLEGED ILLEGAL FOREX TRANSACTION

CBN accused Chaka of engaging in the purchase of forex from illegal operators for trading in naira and dollar securities.

It stated further that the fintech startup has an aggregate turnover of N9.26 billion in more than two years.

In June, TheCable reported that the Securities and Exchange Commission (SEC) granted Chaka Technologies, a licence to offer stocks directly to investors in the country.

TROVE TECHNOLOGIES LIMITED – NO LICENCE/ ILLEGAL FX TRANSACTIONS 

CBN accused Trove of engaging in cryptocurrency trading as well as operating mobile and digital investment app for local and foreign securities without approval.

“A review of the company’s domiciliary account 5071080410 with Zenith Bank Pic showed a turnover of $1.42 million between May 1, 2019, and April 27, 2021.

“Inflows to the account were from investment partners like USA-based Drivewealth LLC ($0.69 million) and ARM Securities Limited ($0.18 million). Other inflows were from illegal FX operators like Vertos Financial Technologies Limited ($0 10 million), West Continental Prospecting
Limited $0.03 million) and West Atlantic Drilling ($0.02 million). The company also received inflows from individuals like Abosede Abibat Oyewole ($0.12 million), Ahutu Amina $0.05 million) Ayobamidele Oni ($0.04 million), Babatunde Olakunla Edun ($0.03 million) and Arinze Alexander Anyaeche ($0.02 million). Outflows from the account included offshore transfers to Drivewealth LLC (51.10 million) for investments on behalf of its clients. Other outflows were to Docklands Enterprises $0.06 million which the transfer instruction described as payment for FX transfer and Simon Olaleye ($0:06 million).”

On the naira account, the apex bank said Trove engaged in ‘illegal forex transactions’ with BDC operators.

“A review of the company’s Naira accounts showed an aggregate turnover of N3.27 billion. Inflows to the account were from PSSPs like Teamapt Lid (N2.49 billion), Paystack (N0.22 billion) and Flutterwave (N0. 11 billion)

“Outflows were in companies involved in B2B payment solutions as well as cryptocurrencies like Verto Financial Technologies Ltd (N1.09 billion) and Paystack (N0.36 billion), Quidax Technologies Ltd (N0.04 billion) and BT Pesa (N0.002 billion). Other outflow included transfers to sundry individuals and payments for bulk purchase of FX from HFT BDC (N0.02 billion, Kiakiafx Services International Limited (N0.006 billion) and BLK Prestige (N0.002 million).

“The foregoing is indicative that Trove Technologies Limited was actively engaged in trading in foreign securities and cryptocurrencies using FX sourced from illegal FX operators and Nigerian FX market in contravention of the CBN circular of 2015.”

The tech platforms immediately informed the public that investors and traders’ funds are in safe hands and accessible.

Bamboo, Trove, Chaka and Risevest have also assured investors that they will work with regulators to resolve all contending issues.