Nigerian Crypto Investors Face Account Freezing: How Flutterwave Hack Affected P2P Services
The recent Flutterwave hack has caused chaos for Nigerian crypto investors using peer-to-peer (P2P) services. The Central Bank of Nigeria (CBN) has flagged several bank accounts of P2P users, leading to difficulties in conducting transactions. Despite having no direct link to the Flutterwave hack, the accounts of 107 individuals have been put on lien/Post-No-Debit (PND) based on a motion ex-parte filed by Flutterwave. This has caused alarm among P2P users who are now wary of using over-the-counter (OTC) markets for trading securities.
Impact of Flutterwave Hack on P2P Users
The Flutterwave hack, which saw $6.5 million (3 billion nairas) illegally transferred from the accounts of the Nigerian fintech company, has resulted in 107 accounts being put on lien/PND, including their fifth beneficiaries. While these accounts have yet to be linked to the hack, some users have confirmed that their accounts have been frozen in connection to the incident.
The situation has discouraged P2P users from using OTC markets, which has further complicated their crypto transfers. The hacked sum flowed into the Nigeria crypto market on different OTCs, and users now face difficulties with financial intermediaries when using P2P services for crypto transfers.
Central Bank of Nigeria evacuates banknotes to Deposit Money Banks. #CBN #DMBs pic.twitter.com/8evRFS4rEB
— Central Bank of Nigeria (@cenbank) March 25, 2023
P2P Market as a Medium for Direct Exchange of Crypto
Investors worldwide use P2P as a medium of direct exchange of crypto between parties without the involvement of a central authority. P2P platforms enable users to swap cryptocurrencies for cryptocurrencies or crypto for cash. In 2021, the CBN announced a regulation that prevented financial institutions like banks from enabling crypto use. However, Nigerians found a way forward and still maintained their leading position as the largest crypto hub of Africa through the use of P2P platforms.
Concerns of the Crypto Community
Some members of the crypto community believe that the situation could impact the interest of Nigerians who are yet to join the crypto digital ecosystem in acquiring digital assets. The situation has caused some businesses to crumble as unsuspecting entrepreneurs have received payments for their services with funds that were allegedly linked to the hacked amount, resulting in confusion and possible legal repercussions.
Black Market Hub for Scammers Laundering Fraud Funds
Despite the aid provided by the P2P market for Nigerian trade, a financial analyst known as Sadeik calls it a black market hub for scammers laundering fraud funds. Sadeik went on to say that a friend of his lost over 500,000 nairas because the person he transacted with had his account flagged in the Flutterwave hack.
Flutterwave’s Response
In an official statement, Flutterwave denied the hack and stated that it identified an unusual trend of transactions on some users’ profiles and immediately launched a review in line with its standard operating procedure. The review revealed that some users who had not activated some of their recommended security settings might have been susceptible. Flutterwave was able to address the issue before any harm was done to its users.
The recent Flutterwave hack has caused significant disruptions for P2P users in Nigeria. While the accounts of 107 individuals have been put on lien/PND, their link to the Flutterwave hack remains unclear. P2P users face difficulties in conducting transactions, and some businesses have suffered legal repercussions. While the P2P market has aided Nigerian trade, it remains a concern for some who view it as a black market hub for scammers laundering fraud funds.
