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 it’s circular referenced BSD/DIRUPUB/LAB/014/001, dated February 5, 2021.
“Our review revealed that the company consummated its asset management activities through its account 1017558580 with Zenith Bank PIc, which 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.
“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.
The financial regulator said, “Our review showed that transactions on Chaka.com are settled through Guaranty Trust Bank Plc accounts of Citi Investment Capital Limited. A detailed review of the transactions are provided below:
“Citi Assets Management Limited, owned by Victor Gbolade Osibodu, Olufunke lyabo Osibodu Foluso Olajide Philips and Vigeo Capital Limited, was incorporated in 2006 to carry on the business of financial and investment advisory services for unit Trusts and Funds.
“The company also owns a mobile/digital investment app (Chaka.com), which provides a gateway for investors willing to invest in local and foreign securities from as N1,000 or USD10. It maintains Naira and domiciliary accounts with Guaranty Trust Bank PLC. The domiciliary accounts (0462887053, 0005577559 & 0137921143) recorded an aggregate turnover of $0.91 million between January 1, 2019, and April 27. 2021.
“Inflows to the account were from offshore investment companies like 4DX Ventures LP ($O. 15 million), Drivewealth LLC ($0.14 million). Golden Palm Investments Corporation $0.10 million), Angellist Holdings. LLC ($0.05 million), Microtraction Investments LLC ($0.03 million) and Blue Rinc Capital ($0.04 million).
“There were also inflows from local investment firms like VGo investment Company ($0.07 million), and Tag Capital Nigeria Limited ($0.02 million). Other inflows were cash deposits from sundry investors ($0.13millon) and FX purchased from an illegal FX operator, Salt River Energy & Allied Limited ($0.05 million).
“Outflows from the account consisted of transfers to offshore investment companies like Drivewealth, LLC ($0.17 million), Oro Development Company ($0.09 million), ABTA Investment Limited ($0.08 million. Dendrobium Limited ($0.02 million), and Trading view incorporated (00.01 million), as well as local online investment service providers like VGO investment Company Limited ($0.06 million) and Rolaid Company Limited ($0.02 million).
“The company also made transfers to Chaka Technologies Limited ($0.12 million) and an offshore cloud service provider, Rackpace international Gmbh (S0.02million).
“Other transfers were to Leadway Assurance Company Limited ($0.05 million) and individuals suspected to be investors like Kehinde Balogun ($0.11 million), Toluwalase Usman ($0.04million) and Alero Patricia Azazi ($0.02 million).”
It stated further that the fintech startup has an aggregate turnover of N9.26 billion in more than two years.
“A review of the Citi Assets Management Limited’s Naira accounts showed an aggregate turnover of N9.26 billion between January 1, 2019, and April 27 2021. Inflows to the account consisted of own account transfers (N3.43 billion) and transfers from a power distribution company Global Utilities Management Company (N3.94 billion), an Australian-based consulting and training company -Oversight Consulting (N0.21 billion), Vigeo Shipping Limited (N0. 10 billion), Oxygron Oll and Gas (N0.05 billion) Holborn Associates Limited (N0.03 billion), VGO investment Company Limited and Munak Group Limited (N0.02 billion), Others were inflows vaguely described as “2020 2nd Tranche” (0.93 billion) and cash deposits by sundry investors (N0.04 billion).”
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 (1016068138 &1010785581) with Zenith Bank Plc 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.
