Cryptocurrency scams in Africa are raking in tens of thousands of dollars monthly, and Nigeria is home to some of these scam projects
Nigeria is one of the top cryptocurrency markets in the world. At one point, it was the second-largest Bitcoin market behind the United States. However, recent research from blockchain analytics firm Whitestream revealed that Nigeria is also home to some of Africa’s leading cryptocurrency scams.
Israel-based blockchain analysis firm Whitestream uncovered four cryptocurrency scams that originated from Lagos, Nigeria’s commercial capital.
According to Whitestream, the cryptocurrency scams were mainly carried out through the social media platform Instagram. The Instagram accounts were designed purposely to look like they were from the United States or Europe. However, in-depth research into these accounts shows that they originated from Lagos.
The scams are similar to cyberattacks carried out in other parts of the world. They target new users looking to enter the cryptocurrency space, asking them to send bitcoins directly to them in exchange for regular profits.
Nigeria is one of the countries with the leading cryptocurrency transaction volumes. The residents turned to cryptocurrencies due to the rising inflation and constant devaluation of the naira. However, while some people use cryptocurrencies to hedge their wealth against the rising inflation and currency devaluation, scammers were also busy targeting new investors.
The Central Bank of Nigeria (CBN) intervened to ban cryptocurrency accounts with banks, making it challenging for people to buy and sell cryptos. The move could have been prompted by the increasing use of cryptocurrencies by scammers, and the CBN wanted to curtail the situation before it got worse.
The scammers lure their victims by displaying a luxurious lifestyle obtained from crypto earnings. They chat with the victims and convince them to send bitcoins, which the scammer promises to invest on their behalf to generate massive returns. However, instead of investing as promised, the scammers cash out.
The scammers usually transfer the cryptos to an exchange, and then transfer it to their local naira accounts. They use virtual private networks (VPNs) to cloak their location and make it look like they are from the United States or Europe. According to Whitestream, it might be the same entity running the various crypto scams.
Despite the CBN’s effort, cryptocurrencies continue to thrive in Nigeria as people have turned to peer-to-peer platforms to buy and sell digital currencies. Hence, investors should always be careful when dealing with supposed ‘crypto experts’ on social media.