On the evening of May 29, 2024, David Adeleke, a Nigerian Afrobeat music star known worldwide as Davido, announced the launch of a new cryptocurrency bearing his name: “Timeless Davido.” This was not Adeleke’s first foray into the cryptocurrency world. In 2021, the Grammy-nominated singer had touted two other digital coins, Rap Doge and Echoke — both of which have since faded into obscurity.
Normally, cryptocurrencies are introduced to the public with a “whitepaper,” a public document detailing information about the asset, its founders, the team that programmed it and other technical details that may help potential investors make informed decisions. For Timeless Davido, however, there was little information about the cryptocurrency available outside of social media. Appearing on live audio discussions on X (formerly Twitter), the pop artist pitched the dream of a $30 million market capitalization for the cryptocurrency to his over 15 million followers.
“HODL HODL! WE ARE JUST STARTING! 30 MILLION SOON COME,” he wrote in one of a series of posts, invoking a cryptocurrency acronym that urges investors to hold on to assets rather than sell in a panic. Within hours, Timeless Davido surged to a market capitalization of $10 million. A serious case of FOMO — or “fear of missing out,” a well-known phenomenon in the cryptocurrency community — ensued, as more latecomers scrambled to buy the token at ever-higher prices.
Among the hundreds of thousands caught up in the fever was a university student named Itohan, who couldn’t resist the lure of cashing in on the speculative frenzy. “I realized there was a massive pump,” she said of the sudden increase in the price of the cryptocurrency. “Influencers were doing PR, and I thought he had created magic. So I bought some of the coins worth $50.” It was a common sentiment.
Nigeria’s growing cultural infatuation with cryptocurrency is not taking place in a vacuum. The backdrop to the country’s growing crypto fever is the breakdown of its traditional financial system, in particular its mismanaged national currency, which has generated massive inflation and other hardships for ordinary Nigerians. As the real economy has languished, more and more Nigerians have been enticed to the digital world in the hope of striking it rich, or merely getting by. The country’s embrace of cryptocurrency now threatens to further destabilize an already struggling society, while fueling criminal enterprises that have preyed on Nigerians and foreigners alike.
Weeks after he announced the removal of petrol subsidies at the start of his tenure in May 2023, President Bola Tinubu floated Nigeria’s national currency, the naira, thereby allowing market forces to determine its value. More than a year since that experiment began, the naira has depreciated against the dollar by nearly 70% to become the world’s worst-performing currency, according to Bloomberg.
Costs of food and energy have skyrocketed, driving inflation to a three-decade high of over 32% in August. This hike in the cost of living has pushed a growing number of young Nigerians to seek refuge from the weak naira in cryptocurrencies, some of which are seen as a more reliable store of value or a means of quickly increasing wealth.
An estimated 33% of the country’s population now invests in cryptocurrency, making Nigeria second only to India in adoption worldwide, according to Chainalysis, a New York-based firm that monitors the use of blockchains, the technological protocol upon which cryptocurrencies are built. Similarly, many Nigerians in the Diaspora, seeking to evade the complications and high costs of traditional remittance channels, resort to cryptocurrencies to send money to their families at home.
But this appetite for cryptocurrencies, which by nature are transnational, has been a headache for Nigerian policymakers. Rather than solving the problems of Nigerians, they say, the country’s shift to cryptocurrency has further damaged the struggling naira, while weakening their ability to govern.
“Crypto should be banned in our country or else this bleeding of our currency will continue unabated,” wrote one of the president’s special advisers on X when the naira sank to record lows in February 2024.
Cryptocurrencies became a lifeline for some Nigerians during a wave of unrest in 2020 over police brutality, after the central bank suspended the bank accounts of individuals linked to the protests. Bypassing the banks, the protesters resorted to cryptocurrency donations to help fund their demonstrations. While this function was a godsend for protesters, it further irritated the government as it struggled to reassert control.
Citing concerns about money laundering and the financing of terrorism, the Central Bank of Nigeria issued a circular in 2021 prohibiting domestic banks from processing cryptocurrency transactions. It further directed the banks to close accounts linked to cryptocurrency trading. Yet the nature of cryptocurrencies is such that individuals holding them do not need intermediaries to transact. In the wake of these restrictions, cryptocurrency investors in the country resorted to peer-to-peer (P2P) transactions to continue trading without bank involvement — throwing a major spanner in the works for the government’s plan to shut down the currencies.
Undaunted by these challenges, the government has continued to fight against cryptocurrency, partly in response to a spike in money laundering cases in the country involving the technology. At least three prominent cryptocurrency companies have pulled out of the Nigerian market in the last six months owing to tightening government regulations.
As recently as July 17, OKX, a global cryptocurrency exchange headquartered in Seychelles, suspended operations in the country. “We are discontinuing OKX services in Nigeria after recent changes in local laws and regulations,” it announced in an email to its Nigerian customers, urging them to withdraw their funds in a short window of time. Months before OKX’s abrupt email to its Nigerian subscribers, Binance, a world-leading cryptocurrency exchange, also removed the naira from trading on its platform.
Binance officials have even been targeted personally. Two of the company’s senior executives, invited for negotiations with local regulators in February, had their passports confiscated upon arrival in Nigeria and were summarily detained by prosecutors. Although one escaped custody weeks later, the other executive, Tigran Gambaryan, remains in detention despite concerns about his deteriorating health. Both Binance and its detained executive currently face trial in a Nigerian federal court on a list of charges related to money laundering and tax evasion.
According to the governor of the central bank, Olayemi Cardoso, an estimated $26 billion flowed through Binance over the past year from untraceable sources worldwide. While the cryptocurrency exchange refused to release information on its most active users in the country, the Economic and Financial Crimes Commission (EFCC), Nigeria’s anti-corruption agency, ramped up its scrutiny of virtual-asset service providers in the country, freezing over 300 Nigerian bank accounts in April alone on suspicion of illicit foreign exchange trading.
Across various cryptocurrency platforms, peer-to-peer marketplaces exist to enable buyers and sellers to trade with each other without the need for an intermediary to negotiate the terms of the transaction. As such, operations within these marketplaces are free of bank surveillance or government oversight, although many exchanges now obtain personal data upon registration in compliance with know-your-customer policies. Nevertheless, billions of dollars, some of them of dubious origin, change hands each day, with many traders becoming unlikely accomplices in scams.
One cloudy Saturday in 2023, a young Nigerian named Simeon, who asked to be identified by an alias for safety reasons, noticed that his bank transactions were stalling. When he contacted the bank’s customer support to lodge a complaint, he received a disturbing message. “My bank said my account had been suspended because of a fraudulent transaction I had been involved in,” the 26-year-old recalled. Days earlier, he had received 269,191.89 naira, or $349.50, in his bank account, the value of 349.5 units of a cryptocurrency called Tether that Simeon had sold to a buyer on the P2P market. Tether, which belongs to a category of cryptocurrency known as stablecoins, pegs its value to the U.S. dollar, meaning that 1 unit of Tether is equivalent to $1.
A rule of thumb among Nigerian P2P traders is to round off the smallest unit of the naira, known as kobo, when sending money, to avoid arousing the banks’s suspicions. For this transaction, that would have been 269,192 naira. But, as Simeon explained, this buyer had paid the negligible kobo, drawing attention to the transaction. Oblivious that a court order to freeze his bank account was on the way, he continued to send and receive money through the same account until that fateful Saturday in June.
“They asked that I should either provide a screenshot explaining the source of the particular money or fill out a consent form.” By filling out the consent form, Simeon would be renouncing claims to the money he had received from the P2P buyer days earlier, thereby allowing his bank to route the sum back to its originating bank account.
Instead, he lied that the money was payment for curtain fabric that he sold. Still, the bank insisted on a transaction receipt from the sender’s end. So he reached out to the buyer on the Binance app and asked him “to send me a debit receipt to prove to my bank that the transaction was legit,” Simeon recounted. “But he said that he had been blocked from accessing his bank app too.”
Despite further pleas, he never heard from the buyer again. Frustrated, he turned to customer support on the Binance cryptocurrency exchange, which proved unhelpful. A week later, the bank followed up with an email containing a court order, urging him to seek legal counsel. “I had to call an old friend I knew from university, who is a lawyer,” Simeon recalled, “before things got out of hand.”
Amid all this, the buyer in question had started to become something of an outcast on the Binance P2P market, as a growing number of traders reported similar problems after transactions with him. Each day in July saw the buyer’s account accrue a torrent of negative reviews, further stoking Simeon’s concern.
What Simeon and the other hapless Binance traders didn’t know at the time was that they were among hundreds of unwitting victims of a million-dollar bank fraud case under investigation by the EFCC. In the early summer of 2023, hackers stole 8 billion naira ($7.6 million at the time) from Access Bank, a Nigerian commercial bank. They laundered their money using cryptocurrencies on the Binance exchange, while filtering it through a series of bank accounts to make it harder to trace. The EFCC did not respond to repeated requests for comments about the case.
Concerns about fraud go back to the origins of cryptocurrency, which was borne out of the 2008 financial crisis and the efforts of a pseudonymous programmer, known only as Satoshi Nakomoto, who developed the code for Bitcoin, the first cryptocurrency. In future years, cryptocurrency, while used by some individuals for legitimate transactions, would become a staple of the criminal underworld, including, most notoriously, the dark web marketplace known as Silk Road, which U.S. law enforcement shut down in 2013 after accusing its proprietor of facilitating millions of illicit transactions.
While cryptocurrency gradually gained popularity worldwide, it remained relatively unknown in Nigeria until 2016. Amid a punishing economic recession that year, the worst that the country had seen in decades, word began to spread around school campuses and churches of a new program that provided financial breakthroughs for its members.
Mavrodi Mondial Moneybox (MMM), a new version of a global Ponzi scheme that originally took off in the 1990s selling unregistered securities to the Russian populace, roped in millions of Nigerians with promises of monthly 30% returns on investment. Describing itself as “a financial mutual-aid network,” this new iteration of MMM employed Bitcoin, thus introducing cryptocurrency to the Nigerian public for the first time. While its promoters walked users through video demonstrations showing them how to set up a “digital wallet” for cryptocurrency on their smartphones, the platform rewarded donations made in Bitcoin with bonuses and higher interest rates.
MMM’s popularity brought cryptocurrency to fame in Nigeria, where it rapidly won the enthusiasm of the public, despite warnings from regulators about the risks of scams and exploitation. By December 2016, when the MMM scheme went bust, an estimated 3 million Nigerians had lost their investments.
Notwithstanding the national distress that followed its collapse, MMM sparked the interest of a generation of Nigerian youth enchanted by Bitcoin as a possible alternative to the struggling naira. Modeled after the erstwhile MMM marketers, a new generation of Nigerian Bitcoin evangelists was born, spreading the gospel of a magical new technology that delivered easy fortunes. Alongside this group, some of whom may have been sincere, were organized criminals, akin to Silk Road users, who found Bitcoin’s anonymity a useful means to launder money, extort profits and avoid surveillance.
The criminals began to make their mark quickly. In 2019, local media reported on the daughter of a Nigerian politician who was freed from captivity after her father had paid $15,000 in Bitcoin to the kidnappers. Meanwhile, digital scam artists switched from simplistic phishing scams to more complex online fraud that employed cryptocurrency and social media networks together to target their victims.
Although it can work as a store of value and means of conducting P2P transactions, Bitcoin is not generally useful for purchases of ordinary consumer goods — thus needing an “off-ramp” back to a currency used in the real world. In Nigeria, while the cryptocurrency flowed to criminals and ordinary users alike, it was soon converted back to naira in the millions to facilitate ordinary spending. Many scammers who had been careful about concealing their tracks online soon started flaunting their opulent lifestyles — with glitzy Bentleys, luxury wristwatches and lavish parties — sponsored by gains from wire fraud, romance scams and other crimes now employing cryptocurrency.
The arrest of a 38-year-old Nigerian scammer known as Ramon “Hushpuppi” Abbas in June 2020 is emblematic. Abbas, who was known for showing off his waterfront apartments, fleets of cars and designer collections to millions of followers on Instagram, was “one of the most prolific money launderers in the world,” according to statements by the FBI.
In 2022, Abbas received an 11-year sentence in the U.S. for conspiring to launder millions of dollars from individuals and companies through bank cyberheists and business email compromise scams, which involve hacking into business email accounts and tricking victims into wiring money to an unauthorized account. One accomplice arrested alongside Abbas was reported to have received at least 1,494 bitcoins as proceeds from such schemes. The riches generated an obvious sense of satisfaction for Abbas, which he broadcast to his social media followers. Weeks before his arrest, he wrote in an Instagram post, “I hope someday I will be inspiring more young people to join me on this path.”
By every measure, Abbas did inspire many young Nigerian men to follow the path of fraud. His Instagram account drew 500,000 more followers in the months after his arrest. As the pandemic lockdown wore on, unemployed Nigerian men scoured Facebook and Instagram for “clients” across Europe and North America to dupe with cryptocurrency investment scams.
The unprecedented amount of money pumped into the U.S. economy during the COVID-19 pandemic ensured that many Americans had more money with which to save, spend, invest, or gamble. Even though Nigeria had sunk into another recession following the slump in global oil prices caused by the lockdown, it was soon to become the largest cryptocurrency market in Africa, hitting a volume of $760 million.
It would take an FBI investigation to uncover the reason behind the boom in Nigeria’s crypto market. At some point, U.S. law enforcement alerted Nigerian authorities to huge inflows of funds to the country through suspicious channels. According to the tip, local cybercriminals had hijacked COVID-19 stimulus packages from the U.S. and other Western countries, using cryptocurrencies to launder $200 to $300 million weekly into Nigeria.
Once Nigerian regulators restricted deposit banks from servicing cryptocurrency transactions in 2021, cybercriminals turned to P2P marketplaces on cryptocurrency exchanges such as Binance to trade their loot and bypass scrutiny. In recent years, Nigeria’s EFCC has prosecuted hundreds of thousands of cybercriminals in a major crackdown. Still, the scams have kept pace, at times featuring some of the country’s A-list celebrities, who leverage their star power to promote cryptocurrency-based schemes for personal gain.
Despite an initial surge of interest, Timeless Davido rapidly lost steam hours after its launch. What had seemed like “magic” to Itohan was quickly revealed as a speculative bubble, as the price of the asset dropped from its initial peaks. But the singer’s assurances of an imminent price boost to come allayed her doubts, convincing her to put in more money regardless. “So I bought it the second time [for $50],” she recounted, “and bought it the third time [for $50] as the coin was decreasing.” Optimistic that the price would rebound, Itohan eventually plowed money equivalent to six months of rent on her home into the digital currency.
The following morning, on May 30, Itohan stared at the digital wallet on her iPhone with shock — the $150 that she had invested in the cryptocurrency had decreased to only $5. The dramatic crash of Davido’s coin sparked a furor on X, with angry users raising questions about the singer’s motives. Later analysis by blockchain experts revealed that ownership of the coin was heavily concentrated among a few wallets, with one wallet holding 4% of the coin’s total supply. Lookonchain, a platform that analyzes cryptocurrency price movements, reported that the wallets linked with the creation of Timeless Davido had raked in $473,000 within 11 hours, before commencing a sell-off. In the world of cryptocurrency, this tactic is known as a “rug pull,” where the creators of a digital currency sell off their holdings at peak prices, leaving late investors like Itohan holding the bag.
Davido, who is the scion of one of Nigeria’s wealthy families, already had a history of promoting ill-advised financial schemes to the public. In 2021, months before his cryptocurrency debut, the music star promoted Racksterli, a Ponzi scheme that purportedly invested in cryptocurrency and real estate, while promising investors a 40% monthly return on their deposits. Racksterli eventually crashed with its investors’ money later that year.
On June 14, two weeks after the Timeless Davido debacle, Nigerian regulators issued a belated disclaimer warning Nigerians against investing in the token, which they deemed “highly risky.” However, the pop artist has not faced any criminal liability for investors’ losses. Neither Davido nor the regulator responded to repeated requests for comments.
After he hired a lawyer friend, Simeon, the embattled P2P trader, hoped that his bank account would be unfrozen before long and he could access his funds once more. But his hope began to dwindle as his attorney briefed him on the bank fraud allegations against him. Weeks bled into months and the legal suit dragged on. More than a year later, after the transaction, his bank account remains frozen. Strapped for cash, Simeon has since opened a new bank account to continue trading on another cryptocurrency exchange. “I am very cautious about who I trade with,” he said.
As they have despaired of the real economy and their national currency, Nigerians have kept their faith in cryptocurrency, despite high-profile cases of fraud and criminality. Beginning in March, a new wave of cryptocurrency-based games that promise to reward players with cryptocurrency tokens that can be swapped for cash on exchanges has led to a fresh craze among the populace. Hoping to make a lucky break, bank workers tap constantly on their smartphone screens as they shuffle to work and schoolchildren play on their phones stealthily under desks at school. TikTok clips have even shown commercial drivers playing to earn cryptocurrency with one hand while steering their vehicles with the other.
“I’ve got like four that I’m tapping on now. Sometimes I use an auto-robot to help with the tapping,” said Gabriel Uket, an undergraduate based in Calabar, a city in southeastern Nigeria. In the last four months, he has earned 224,000 naira, or around $140, by playing two such games. “I’m just waiting for Hamster Kombat to be launched,” he added, referring to a wildly popular Telegram-based game that Iranian authorities once denounced as a form of “soft war” by the West (and which has recently landed in Nigeria).
Nigeria is a country dependent on imports, and the falling value of its national currency has made cryptocurrencies an alluring alternative for young Nigerians like Uket, seeking to hedge against rampant inflation and make money at the same time. As long as Nigerians are desperate to get into the cryptocurrency world, they will remain vulnerable to investment scams.
Itohan continues to hold her Timeless Davido assets, even though she doesn’t think they will ever be worth what she paid for them. “I’ll be launching my own coin soon,” she added.
As the country’s economic troubles persist, cryptocurrency, despite its seemingly endless pitfalls, remains for many Nigerians the closest thing they have to a ticket to wealth.
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