The Economic and Financial Crimes Commission (EFCC) has raised concerns over the growing threat of virtual asset and investment scams in Africa, warning that these schemes have the potential to surpass (regular) money laundering as a major challenge to the African continent’s development.
The EFCC Chairman, Mr. Ola Olukoyede, represented by Ahmed Ghali, Acting Zonal Director of EFCC’s Lagos Zonal Directorate 2, made his remarks at a stakeholder engagement marking this year’s African Anti-Corruption Day at the Commission’s office on Okotie Eboh Street, Ikoyi, Lagos.
The EFCC Chairman disclosed that virtual asset scams are on the rise, with fraudsters exploiting the anonymity and decentralized nature of cryptocurrencies to hide stolen funds and unexplained wealth. “Our findings showed that fraudulent politicians are already perfecting schemes and hiding their loot in cryptocurrencies to beat the investigative dragnets of anti-corruption agencies,” Mr Olukoyede said.
Understanding Virtual Assets
Virtual assets are digital representations of monetary values that operate on blockchain technology and can be traded, exchanged, or transferred for payment or investment purposes. They include cryptocurrencies, digital tokens, and other forms of digital assets. According to Mr Olukoyede, virtual assets themselves are not inherently criminal, but they become a problem when used for illicit activities.
The EFCC Chairman’s statement “virtual assets themselves are not inherently criminal” highlights the importance of a nuanced regulatory approach to virtual assets. By acknowledging that virtual assets are not inherently criminal, Mr. Olukoyede emphasizes the need for regulations that balance innovation with investor protection. This approach recognizes the potential benefits of virtual assets while addressing the risks associated with their use in illicit activities. The key implications speak to the need to:
- adopt a risk-based approach that focuses on mitigating specific risks associated with virtual assets, rather than imposing blanket restrictions;
- adopt proportionate regulation so regulatory requirements are proportionate to the risks posed by virtual assets; and
- invest in virtual assets education and awareness that can help investors understand the benefits and risks of virtual assets, thus promoting responsible investment and reducing the likelihood of illicit activities.
By adopting this nuanced approach, regulators can create a more effective and sustainable framework for virtual assets, fostering innovation while protecting investors and maintaining market integrity.
Read also: Crypto Fraud: Nigeria’s EFCC and Toronto Police recover $225k from fraudster.
The Role of Investors in Preventing Scams
Mr Olukoyede emphasized that investors often inadvertently aid fraudulent practices by failing to conduct due diligence on investment schemes. He cited the infamous CBEX scam, where investors lost significant amounts of money due to their negligence. “No investment scam can succeed without the negligence of investors,” Mr Olukoyede warned.
The EFCC Chairman’s warning highlights the critical role of investor due diligence in preventing investment scams. By failing to conduct thorough research, investors inadvertently enable fraudulent schemes, as seen in the CBEX scam. This emphasizes the need for investors to be vigilant and proactive in verifying investment opportunities, rather than relying solely on regulatory oversight. Ultimately, investor education and awareness are crucial in preventing investment scams and promoting a safer investment environment.
Read also: Why CBEX Will Happen Again in Nigeria, If Stakeholders Don’t Do Things Differently
The Need for Public Awareness
Mr Olukoyede stressed the importance of public awareness and education in preventing virtual asset scams. He urged experts to demystify virtual assets for the benefit of ordinary Nigerians and help close the “window of ignorance” that fraudsters exploit. “Virtual asset and investment fraud are preventable,” Olukoyede said. “The key is education, vigilance, and timely reporting.”
The EFCC Chairman’s emphasis on public awareness and education highlights its critical role in preventing virtual asset scams. By demystifying virtual assets and promoting understanding, experts can empower ordinary Nigerians to make informed decisions and avoid falling prey to fraudsters. Education, vigilance, and timely reporting are key to preventing virtual asset and investment fraud.
Red Flags to Watch Out For
Investors should be cautious of investment opportunities that promise guaranteed high returns, have vague company details, or lack regulatory approval. Olukoyede advised investors to research thoroughly before investing, verify regulatory compliance, and never trust unsolicited offers. “If it sounds too good to be true, it’s probably a fraud,” he cautioned.
As stated by the EFCC Chairman, the EFCC is taking proactive steps to combat virtual asset scams, including intelligence gathering, specialized training, and strategic enforcement actions. Mr Olukoyede assured that the Commission is ahead in every material sense and has recorded significant operational successes, particularly in the investigation and prosecution of virtual asset-related crimes.
Interactive Session and Stakeholders Engagement
The interactive session featured technical presentations by two senior EFCC officials – ACE II Abbah Sambo, Head of the Advance Fee Fraud (AFF) Section, and CSE Alex Ogbole, Head of the Commission’s Digital Forensic Laboratory in Lagos. Other senior EFCC officers present at the program are the Head Investigation, Lagos Zonal Directorate 2 ACE II Moses Oguzi; the Head of Forensics, Lagos Zonal Directorate ACE II Joshua Oloye; and ACE I Deborah Ademu-Eteh, Deputy Director, Legal.
Stakeholders who were present and also contributed at the interactive session include representatives from Blockchain Industry Coordinating Committee of Nigeria (BICCoN); the Virtual Asset Service Providers Association (VASPA); and A&D Forensics. Amongst other concerns raised, BICCoN’s Chairman, Lucky Uwakwe identified what he considered certain lapses in the current regulatory and enforcement system regarding virtual assets in the country, including the blanket blocking of a number of virtual asset platform websites by Nigerian authorities over the last one year without any engagement with industry operators. Mr Uwakwe proposed a more proactive and collaborative approach in Nigeria’s combat against financial crimes.
This was reinforced by Senator Ihenyen, Executive Chair of VASPA, who pointed out that particularly because of the inherent decentralized nature of virtual assets, Nigeria needs policy and regulatory approaches that encourage transparency, support self-regulation, and promote stakeholder engagement and participation. While commending the EFCC for all the work it is doing in the fight against financial crimes in the country, Mr Ihenyen encouraged the EFCC to collaborate with virtual asset industry players. With effective stakeholder collaboration and improved transparency through a more efficient registration and licensing process, the opacity that often enable bad actors in the virtual assets and investment space would be largely addressed, said Mr Ihenyen. On her part, Buki Ogunsankin, Vice Chair (Programs and Communication) of VASPA, suggested that the EFCC could introduce a tiered certification system for the virtual asset sector and deploy artificial intelligence (AI) as a strategic tool to enhance tracking. Similarly, Oge Anene, Crypto Investigation Associate at A&D Forensics pointed out that as criminals continue to advance their schemes, it is imperative for the EFCC to also continue to invest in advanced blockchain analytics tools to enhance investigations and prosecutions.
All in all, stakeholders emphasized the importance of collaboration between law enforcement agencies, regulators, and industry players to sanitize the virtual asset and investment space and prevent financial crimes. The goal of this collaboration is to ensure a safe and secure environment for virtual asset transactions, free from illicit activities. Both BICCoN and VASPA representatives have indicated their availability for further discussions with the EFCC to achieve set objectives, which has been welcomed by the EFCC. By working together, stakeholders can help prevent financial crimes and promote a more secure and transparent virtual asset industry.
The African Anti-Corruption Day is commemorated annually on July 11 to mark the adoption of the African Union Convention on Preventing and Combating Corruption (AUCPCC) in Maputo in 2003. The 2025 theme, “Promoting Human Dignity in the Fight Against Corruption,” highlights the urgent need to address corruption’s devastating impact on human dignity, particularly for vulnerable populations.
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