Money Laundering Accusations and Cryptocurrency Scams

Africa is home to the world’s smallest cryptocurrency economies but is also one of the fastest-growing regions to adopt cryptocurrencies because they offer swift, convenient, and efficient means of investment, cross-border payments, and remittances. That is also proving lucrative for scams. Over the past few years, many cryptocurrency swindles have been reported in different African countries, leading to millions of dollars in losses for investors. Last year, the global value of illicit cryptocurrency activity, including scams, is estimated at $10bn, according to Chainalysis, a platform that provides blockchain data. As cryptocurrency adoption gains steam on the continent, it will be important for potential investors—and regulators—to learn from the scams that have come before.

Meanwhile, Nigeria’s payment app OPay was hailed as Africa’s 3rd largest unicorn in August last year, after a $400m injection by SoftBank and others, who valued it at $2bn. Now, OPay has been caught up in accusations of money laundering by the Indian authorities, where Private loan company PC Financial Services Limited (PCFS) is under fire after police in India seized $14m in what is suspected to be a case of money laundering. Chinese billionaire Zhou Yahui, who controls OPay, has been in trouble with foreign regulators before, having been forced to sell dating app Grindr by US regulators due to concern over data privacy, and has also been accused by short-seller Hindenberg of allegedly predatory short-term lending.

It may not be by chance that the Indian government is preparing regulations to ban all privately owned cryptocurrencies from trading in India.