The rapid growth of the cryptocurrency market has brought with it a surge in scams targeting unsuspecting investors. Crypto robbers armed with anonymity and sly tactics are defrauding people of their hard-earned money, FELICITAS OFFORJAMAH reports.
FEGA Sunday and John Oladipupo, crypto-curious investors, met an investment platform that convinced them to invest their 4.53738393BTC and acted on it. A week later, they discovered that it was all fraud and that they were blocked from accessing the promoters of the platform on social media.
Michael Chukwusomaga, a 100-level student at the University of Ilorin, was also excited to invest his school fees in the investment platform that he stumbled on online. For him, the testimonies were convincing, convincing enough to make him invest his N50,000 tuition fee.
In an interview with The Guardian, he revealed that one of his friends, who was into crypto, had boasted to him of the massive earnings he makes, so he decided to try it out.
“I joined the WhatsApp group and he gave us some tutorials while asking us to DM him. After a while, he messaged me telling me to invest whatever I had, that the rate was high. He said he did not want me to miss out and that he was doing me a favour. At that time, the only thing I had was the N50,000 my parents just sent to me for my school fees. I transferred the money into his account. After taking my money, he has blocked me,” he said.
A model and graphics designer, Chidera Nwaenyi, encountered the scammers on Telegram. “They claimed to do Bitcoin lending. For over six months, it was paying till they claimed to have a hitch. I lost N2 million and have vowed never to do anything online again,” she recalled.
According to Google Trends statistics, El Salvador is the only country with a higher interest in cryptocurrency than Nigeria, Africa’s largest cryptocurrency market.
Delta State exhibits the highest level of interest in Bitcoin based on regional geographic metrics. It is followed by the states of Anambra, Ekiti, Enugu, Ondo, Ebonyi, Bayelsa, Osun, Edo and Imo.
Nigeria continues to have the largest percentage of cryptocurrency users in Africa and is among the most developed countries worldwide, with a yearly growth rate of nine per cent, despite the recent decrease in Bitcoin’s popularity.
Nigeria is ranked third out of just six countries that have experienced consistent growth since 2021, according to Chainalysis research.
Given that a large proportion of its young, active population utilises the digital space, Nigeria has the largest cryptocurrency market in Africa in terms of both interest and usage.
This rapid interest and lack of proper regulation in cryptocurrency has made fraudsters thrive on a platform for gold, making investors weep.
Bait of lavish life
Cryptocurrency fraudsters take advantage of the social media sites, Instagram and Serpentine, where the con artists fabricate a story of an opulent lifestyle attained through bitcoin investments. Although these profiles are made in Nigeria, they attempt to mimic profiles from the U.S. or Europe.
The scammers entice novice cryptocurrency investors with images of an affluent lifestyle before persuading them to invest in cryptocurrency through private messages that offer lucrative rewards. Upon obtaining victims’ funds, scammers typically sell them on platforms such as Binance and cash out.
Phishing attacks
Official government websites are not spared as crypto scammers redirect potential victims to scam MetaMask sites.
The Ethereum-based wallet, MetaMask is popular among global crypto community members. Since many investors in the digital assets space frequent the website, scammers may drain their wallets if they use fake URLs.
According to an internal investigation’s findings, anyone who finds themselves on these government links is sent to a “phishing” website named “MetaMask.io,” according to a CoinTelegraph article. Among the websites that are leading users to the fraudulent MetaMask website are those run by the Municipal Corporation of Ambala and the Nigerian Postal Service.
Governments all over the world have expressed serious worries about the frequent scams that plague the digital assets industry as well as the misuse of cryptocurrencies for illegal activities like money laundering and terrorism financing, which has slowed the rapid growth pace of Web3.
The matter has not yet been addressed by MetaMask. In the meantime, social media users have been sharing screenshots of these compromised official URLs.
Users are alerted to a possible phishing attempt by Microsoft Defender, the company’s built-in security system, by a red alert. If visitors visit the website nonetheless, they risk running into financial difficulties.
Pig butchering scam
In a pig-butchering scheme, con artists build a rapport through online contacts, and lure the victim into investing in a phony Bitcoin scheme. Before recognising they are a victim of fraud, the victim is frequently persuaded to make more payments.
One popular way for crypto fraudsters is to use dating applications. These frauds center on relationships, usually long-distance and exclusively virtual, in which one side gradually wins over the other’s trust. Gradually, one side begins to persuade the other to give or purchase money in cryptocurrency. The dating scammer vanishes as soon as they have the money.
A fashion designer, Lilian Oghenejabor was a victim. A regular user of the Tinder app, she had met her devil in human skin showering her with love messages (also a scam) and building trust over time with her.
According to Oghenejabor, the relationship lasted for a year and a half. “I didn’t smell anything fishy. He wasn’t like others who would pressure for intimacy or ask to meet for a hookup. He felt like he was just into me. So, along the line when he asked about my financial standing, I told him everything. He said he could make me richer unless I trust him and do as he says.
“He convinced me to invest in crypto with almost all my savings. He assured me that it would triple. After, he asked me for N750,000 for what I do not even remember but I had to borrow that money. After three days, when I tried to contact him, I found out that I was blocked. I tried everything; I couldn’t trace him. I was crazy then, but I’m fine now.”
The Federal Bureau of Investigation (FBI) in the United States has issued multiple alerts about the growing prevalence and popularity of this scam across the country. Multiple arrests made by the Economic Financial Crimes Commission (EFCC) have revealed that pig butchering disease is prevalent in Nigeria and cuts across borders.
Last year, in November, a Nigerian crypto scammer, Ekwue Joshua Femi, was convicted and sentenced to one-year imprisonment for defrauding an American, Sheedy Morgan, of the sum of $20,000.
The EFCC released a statement stating that Femi was jailed by Justice O.O. Abike Fadipe of the Special Offenses Court located in Ikeja, Lagos. Femi was charged with two counts related to money laundering, obtaining property under pretense, and impersonation, and he was arraigned by the Lagos Zonal Command of the EFCC. He had falsely represented himself to be ‘Mary Lanning Werner’ on his Facebook account to defraud Sheedy Morgan.
Prosecution counsel, S.I Sulaiman had reviewed the facts of the case. He said: “Upon his arrest, he volunteered his statements. Investigations were conducted and forensic evidence was printed out from his phones and his digital assets. In his statement, he confessed to being into spamming and crypto investment fraud. He also confessed to having benefited the sum of $20,000 from the fraud.”
Justice Fadipe found the defendant guilty sentencing him to a year in prison with the possibility of a N1 million fine. A Federal High Court sitting in Ikoyi, Lagos, on Friday, October 6, 2023, convicted one Lawrence Success Karinate, a Peer-to-Peer crypto trader for computer-related fraud.
Convicted on a one-count charge bordering on cybercrimes, an offence contrary to and punishable under Section 22(2)(b) of the Cybercrimes (Prohibition, etc.) Act, 2015, fraudulently posed himself on social media platforms, as a female, bearing the name “Jessie Randall”, a fashion influencer, to unsuspecting members of the public
In 2021, the EFCC uncovered a N3.5 billion cryptocurrency fraud in Sokoto State. The head of the anti-corruption agency in Sokoto zonal office, Bawa Kaltingo, had revealed that the suspected fraudsters deceived their victims in Sokoto and made them believe that the funds would be used to trade in forex and cryptocurrency.
Naming the prime suspects as Benson Kufre John and Iraboh Eseosa, he said that the two suspects employed the services of one Sunday Marcus to register a company with the Corporate Affairs Commission as well as opened a bank account using fictitious addresses and unregistered phone numbers.
However, Nigeria hasn’t had a consistent stance on digital assets. The disparate positions taken by the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN) at one point, demonstrated this discrepancy. Although the SEC has often stated that it is eager to regulate cryptocurrency assets, the CBN has taken action to stifle the expansion of cryptocurrency trading.
A few days ago, the Nigerian Senate Committee on Capital Markets called for the regulation of cryptocurrency and warned that the country’s unclear position could be costing the country. The government of Bola Tinubu was urged by the committee to develop the capital and crypto markets to defend the local currency.
Calling for regulation of cryptocurrency to protect investors, who are already engaged in digital asset trading, the committee chairman, Osita Izunaso, argues that regulation is the only logical step to take since authorities have failed to stop residents from trading crypto assets.
Shortly after the newly appointed Director-General of SEC, Emomotimi Agama, addressed the committee, Izunaso made the statement. Izunaso briefed journalists and warned that Nigeria would be missing out due to its ambiguous stance on cryptocurrencies.
Tech expert and lecturer at a hackerspace in Lagos, Tochukwu Ude, had said: “Regulatory authorities are keenly aware of these risks and are working to implement measures to combat illicit activities in the cryptocurrency space. However, the pseudonymous nature of cryptocurrencies presents challenges for law enforcement agencies seeking to identify and prosecute criminals.” He also said that cryptocurrencies, with their decentralised nature and price volatility, posed potential risks to financial stability.
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