Crypto currency seems to be here to stay. But investors need to be protected from fraudsters, writes EKONG EKPENYONG
In the last four years, crypto currency, or digital currency, has become ubiquitous in both global and domestic economies. It has proved to be highly volatile and risky, forcing several regulatory bodies, including the Central Bank of Nigeria to warn against huge investment in the crypto market, after the crash of Bitcoin in 2018.
Though CBN had banned crypto currency, Financial Street gathered that, due to pressure, it is planning to introduce a crypto currency for Nigerians.
Bitcoin is a digital currency, which was mainly created to speed up cross-border transactions, reduce governments’ control over transactions and possibly simplify the process without having third party intermediaries.
Crypto currency is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of computerised database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership. It could also be used to pay for goods and services, but using an online ledger with strong cryptography.
But a lot of risks are involved. Fraudsters could easily harm crypto users more than they could in other financial deals. This, notwithstanding the advantages of using the digital currency, has put users on the edge.
In a chat with Financial Street, a cyber security expert, Nathaniel Benjamin, warned that unless financial regulatory authorities put up a vigorous financial system and regulation for crypto currency, losses would continue to mount.
“Good amount of money has been lost to ignorance of new entrants into the crypto currency market. Nigeria is no exception to these crypto scammers,” said Smith Obugagbe, a technical officer of one of the oldest Nigerian banks. “These fraudsters know how well to capitalise on the Bull Run, as they promise investors huge returns within a short period.”
But the Chief Executive Officer of Bells Limited, Kingsley Benjamin, said, “It is the responsibility of Facebook and Twitter to take action against most crypto scammers that attempt fraud via the electronic process.”
In most cases, greed for extra profit is a common reason people lose money to fraudsters.
Again, carelessness and lack of research give fraudsters access to people’s accounts. Some exchanges that start well can turn sour at any time because people fail to innovate to stay relevant in the market.
Financial Street learnt that people got scammed the most during the launch of Bitcoin.
EFCC wades in
The Economic and Financial Crimes Commission has declared war against crypto scam and fraudulent schemes. It warned the public against patronising the get-rich-quick schemes.
Losses from crypto currency crime surged to N4.52bn in 2019, insider theft soared, even as hacking losses declined, according to a report from a blockchain forensics company.
Nigeria boasts a great potential to protect its citizens from crypto scam, if the citizens would adhere to the warning against online quick commerce and fraud.
The Executive Secretary, Nigerian Institution of Estate Surveyors and Valuers, Lagos Branch Resource Centre, Samson Echenim, told Financial Street, “Crypto currency scam is serious and easier to perpetrate because cryptos are electronic monies; they are stolen from people through ponzi schemes, fake forex trading and a lot of internet dealings.
“Though government regulates against use of crypto in most countries, people transacting with crypto need to protect themselves by avoiding ponzi schemes and forex trading platforms that are not confirmed to be genuine.”
Why the scam persists
We are in the world of Information and Communications Technology where ideas and innovation skills can be shared either positively or negatively. But the awareness on crpto scam seems to be low.
An accountant, Peter Clinton, said, “Crypto scam is real, but the education is not enough, that is why the scammers are having a field day. Scams abound all over the world. But with sufficient education, it could be reduced.”
The high rate of crypto scam is lower in Nigeria compared to Canada, said Akin Akinrimade, a web designer and cyber security expert in Canada.
He told Financial Street, “In 2018, over 60,000 Canadians were duped from various calls, emails, text messages, wrong links on tax matters, and many were paying money via electronics out of fear and impatience.
According to him, one can only manage crypto scam by avoiding unfamiliar sites, reading carefully before clicking on any link, taking away fear and greed, and finally being patient and observant while working on the system.
Nevertheless, scams are not new in any industry, and crypto, being a decentralised and open source concept, is one of the easiest to replicate, the Chief Clerical Officer and IT expert in a reputable college in Nigeria, Ekong Matthew, said.
“This could only be achieved when we have special intelligent network professionals and adequate sensitisation of the populace,” he said.
Every website set up to resemble another before it could be the handiwork of scammers.
Moreover, any valid startup without a lock icon indicating security near the URL bar and no “https” in the site address could be harbouring scammers.
Also, Internet users have been advised to be wary of any exchange that springs up overnight and starts promising fortune, because once one’s password is compromised, danger looms, if the intention of that exchange is dubious.
The only way not to be scammed is to deal with legitimate sources of information, as well as education of investors through trusted sources.
Get real time update about this post categories directly on your device, subscribe now.