1. Introduction
The digital age has revolutionized investment opportunities ranging from cryptocurrency
and forex trading to crowdfunding and peer-to-peer lending platforms. However, while
technology has made investing more accessible, it has also created fertile ground for
fraudulent schemes. Understanding the legal framework governing online investments
and knowing how to protect yourself is crucial.
2. Legal Framework Governing Digital Investments in Nigeria
Online and digital investments in Nigeria are regulated under several existing financial
and cyber laws. The key regulatory and legal frameworks include:
a. Securities and Exchange Commission (SEC) Regulations
The Securities and Exchange Commission (SEC) is the principal body responsible for
regulating investment activities.
•Under the Investment and Securities Act (ISA) 2007, any entity offering
investment opportunities must be registered with SEC.
•The SEC Rules on Crowdfunding (2021) govern online fundraising and digital
investment platforms.
•The Rules on Digital Assets Issuance, Offering Platforms, and Custodians
(2022) regulate cryptocurrencies and tokenized investments.
b. Central Bank of Nigeria (CBN) Guidelines
The CBN regulates payment service providers, fintech companies, and virtual asset
operations involving fiat currency transactions.
•The CBN Guidelines for Licensing and Regulation of Payment Service
Providers (2021) ensure investor funds are safeguarded through approved
payment systems.
•Banks are directed to block accounts linked to unlicensed investment operators.
c. Nigerian Communications Commission (NCC) and NITDA
•The Nigerian Communications Commission (NCC) oversees online
communication compliance.
•The National Information Technology Development Agency (NITDA) enforces
data protection through the Nigeria Data Protection Act (2023), protecting
investors’ personal and financial information.
d. Cybercrime (Prohibition, Prevention, etc.) Act, 2015
This law criminalizes online fraud, identity theft, and other cyber-related investment
scams. Victims can report violations to law enforcement or the Economic and Financial
Crimes Commission (EFCC).
3. Common Online Investment Scams to Avoid
Fraudsters often exploit investors’ desire for quick returns. Common scams include:
a. Ponzi and Pyramid Schemes
These rely on funds from new investors to pay existing ones. They often promise
unrealistic returns and collapse once recruitment slows.
b. Fake Cryptocurrency Exchanges or Wallets
Fraudulent websites may mimic legitimate crypto exchanges, luring users to deposit
funds that are later inaccessible.
c. Phishing and Fake Investment Apps
Scammers clone genuine platforms or send fake emails asking investors to “verify”
details, stealing login credentials or personal information.
d. Unregistered Online Investment Platforms
Platforms not registered with SEC or CBN often operate illegally and are high-risk.
4. How to Stay Protected
To minimize risk, investors should:
1.Verify Legitimacy
•Confirm registration with the SEC via sec.gov.ng.
•Check that payment platforms are CBN-approved.
•Review the company’s physical address, directors, and corporate filings with the
Corporate Affairs Commission (CAC).
2.Be Skeptical of Unrealistic Returns
Any investment promising returns above market rate (e.g., 30–50% monthly) is
suspicious.
3.Secure Your Accounts
Use two-factor authentication, avoid public Wi-Fi for transactions, and change
passwords regularly.
4.Keep Proper Records
Save emails, transaction receipts, and chats for potential legal action.
5.Educate Yourself
Follow financial literacy updates from SEC, CBN, and reputable financial blogs or legal
advisories.
5. What to Do If You Fall Victim
If you suspect fraud or have been scammed:
Step 1: Report Immediately
•SEC Complaint Portal: sec.gov.ng
•EFCC: efcc.gov.ng
•Nigerian Police (Cybercrime Unit) or NCC for internet-related issues.
•Provide proof—payment receipts, chat evidence, and website details.
Step 2: Notify Your Bank
Ask your bank to initiate a Post No Debit (PND) or recall the transaction if it’s recent.
Step 3: Seek Legal Assistance
A lawyer can help you:
investigation.
Step 4: Warn Others
Share verified warnings on social media and report scam websites to NCC or NITDA.
6. Conclusion
Online investments present valuable opportunities but require careful navigation.
Nigeria’s regulatory landscape—though continually evolving—provides mechanisms for
investor protection. Ultimately, due diligence, informed decision-making, and adherence
to legal guidelines remain the strongest safeguards. Always verify before investing, avoid
emotionally driven decisions, and seek legal guidance whenever uncertainty arises.
