Crypto & Forex Firms: Legal Status — in recent years, Nigeria has witnessed a surge in platforms like CBEX and emerging rumours around companies like Torpedo, which claim to offer high returns on cryptocurrency or forex investments.
These platforms often attract users with promises of passive income through trading algorithms or referral systems. However, their legal validity remains questionable, raising concerns for potential investors and regulatory authorities alike.
ARE COMPANIES LIKE CBEX OR TORPEDO LEGAL IN NIGERIA?
Companies like CBEX typically operate in the grey area of unregulated or semi-regulated digital finance. Many such companies register as tech firms or business consultancies but engage in unauthorized investment schemes or unlicensed securities trading.
To operate legally in Nigeria, a company involved in investment or trading must comply with several laws and be licensed by specific regulators. Here’s a breakdown:
1) COMPANIES AND ALLIED MATTERS ACT (CAMA) 2020
Section 18 – All companies must be registered with the Corporate Affairs Commission (CAC) to carry on business.
Limitation: CAC registration alone does not authorize a company to carry out investment or financial services.
2) Investment and Securities Act (ISA) 2007
Section 38(1) – Only persons licensed by the Securities and Exchange Commission (SEC) may carry on capital market activities (investment, portfolio management, etc.).
Section 67–70 – Regulates Collective Investment Schemes. Many platforms like CBEX structure their offerings as investment pools, which qualify under this section and must be registered.
Punishment:
Section 54(5) – Engaging in investment activities without SEC registration is an offence punishable with a fine not less than N500,000 and/or imprisonment for up to 3 years.
3) Central Bank of Nigeria (CBN) Act & BOFIA 2020 (Banks and Other Financial Institutions Act)
Section 2(1) BOFIA – No person shall carry on financial services (e.g., forex trading) without a license from the CBN.
Punishment:
Under Section 61 BOFIA, an offender may be fined not less than N2 million and further fines of N50,000 per day for continuing the offence.
4) CBN Circular on Cryptocurrencies (2023 Update)
While earlier circulars banned banks from facilitating crypto transactions, new CBN guidelines now permit Virtual Asset Service Providers (VASPs) to operate, provided they register with the SEC and comply with anti-money laundering (AML) regulations.
5) Money Laundering (Prevention and Prohibition) Act, 2022
Platforms accepting deposits or managing client funds without proper licenses may be in breach of AML laws.
Section 18(3) – Knowingly aiding illegal financial transactions attracts imprisonment of up to 7 years or a fine of N10 million, or both.
6) Advance Fee Fraud and Other Fraud Related Offences Act, 2006
Section 1(1) – Any person who obtains property or money under false pretenses (e.g., promising unrealistic returns) is guilty of fraud.
Punishment:
Up to 20 years imprisonment.
REGULATORY INSTITUTIONS OVERSEEING THESE COMPANIES
| Institution | Role |
| Corporate Affairs Commission (CAC) | Registers companies and business names but does not regulate financial activities. |
| Securities and Exchange Commission (SEC) | Regulates investments, collective investment schemes, capital market operators, and VASPs. |
| Central Bank of Nigeria (CBN) | Licenses and regulates financial institutions and forex operators. |
| Nigerian Financial Intelligence Unit (NFIU) | Tracks money laundering and terrorism financing. Works with CBN/SEC on suspicious financial activity. |
| Economic and Financial Crimes Commission (EFCC | Investigates and prosecutes financial crimes and fraud. |
| Federal Competition and Consumer Protection Commission (FCCPC) | Monitors deceptive
and unfair business practices. |
| National Information Technology
Development Agency (NITDA) |
Oversees data protection compliance for
digital platforms. |
Consequences for Illegitimate Companies Like CBEX or Torpedo
If found guilty of operating without appropriate licenses or defrauding the public, such companies and their promoters may face:
| OFFENCE | GOVERNING LAW | PUNISHMENT |
| Unlicensed investment operations | Investment and Securities Act (ISA) 2007 | Fine of N500,000– N1,000,000 and/or up to 3 years in prison |
| Operating a financial institution without a CBN license | BOFIA 2020 | N2 million fine, plus N50,000 daily while the offence continues |
| Running illegal collective
investment scheme |
ISA 2007, SEC Rules
Closure of scheme |
Asset forfeiture, and fines |
| Obtaining money under false
pretenses |
Advance Fee Fraud Act, 2006 | Up to 20 years imprisonment |
| Money laundering or aiding unregulated fund transfers | Money Laundering Act 2022 | Up to 7 years imprisonment or N10 million fine |
CONCLUSION
Until companies like CBEX or Torpedo register with the appropriate financial regulatory bodies and comply with Nigeria’s Investments and Securities Act, CBN forex guidelines, and crypto licensing frameworks, they remain legally invalid and high-risk. Investors are advised to verify a platform’s regulatory status through SEC’s capital market operators portal or CBN’s financial institutions directory before committing funds.
Platforms like CBEX or Torpedo often display the following signs of illegitimacy:
- Unrealistic returns (e.g., 10–20% per week)
- Referral-based structures resembling Ponzi schemes
- Lack of transparent company ownership
- No verifiable address or physical
- No registration with SEC or CBN
- Absence of a clearly licensed broker or VASP license
