Cryptocurrency exchange Paxful is in hot water in Nigeria after crypto traders in the country claimed the firm has been closing down their accounts illegally, causing them to lost tens of millions of dollars.
The traders have filed the petition with Nigeria’s Economic and Financial Crimes Commission (EFCC), accusing Paxful of robbery, fraud, and breaching its terms and conditions. The EFCC is the country’s financial services law enforcement agency. According to a report by local outlet Punch Nigeria, the traders were joined on the petition by United Global Resolve for Peace, a non-governmental organization.
The petition claims that Paxful falsely accused Nigerian traders of being involved in fraudulent activities. It then allegedly used this excuse to close down thousands of accounts belonging to Nigerian traders. Traders who owned cryptos when their accounts were closed lost those cryptos.
Part of the petition stated:
“A few days ago, our organization was approached by some Nigerians who complained bitterly that Paxful Incorporated, the company that owns the online cryptocurrency trading and exchange platform, ‘https://paxful.com’ has been ripping them of their life investment in cryptocurrency by suspending their accounts, deactivating their wallets and refusing to return the value in their accounts to them even after investigation and finding that they were not involved in any fraudulent activities.”
The petition also gave some background on the immense success that the Estonia-based Paxful has had with Nigerian users. In 2018, the exchange made $20 million in profits from its operations worldwide. But it was Nigeria that contributed the bulk of this profit, making up over 40% of the total.
The petition further revealed how Paxful has used the opportunity to rob Nigerian traders. It stated:
“The respondent has, through willful disregard for contract and rules of commercial transaction, done a lot to rob Nigerians of their hard-earned money by its unrestrained activities of blocking their accounts and stating that investigation will be conducted. At the end of the investigation, the respondent always comes out to say the vendor has done nothing wrong and thereafter release their accounts without the funds in it.”
The report by Punch Nigeria also quoted some of the traders whose accounts have been drained under the guise of investigations. One of them is Samuel Olanrewaju, a trader who lost over 21 million Nigerian naira ($60,000) to the scam. Olanrewaju alleges that Paxful confiscated his Bitcoin Core (BTC) stash in November 2018. Paxful accused him of having a false online profile, a charge he still insists he is innocent of. Olanrewaju claimed Paxful is stereotyping all Nigerians as scammers. He told the news outlet, “We have about three million Nigerians trading on Paxful platform and they accounted for 40 per cent of its revenue. Despite this, the leadership of the firm was always referring to Nigerians as scammers.”
Paxful responded to the accusations in an email, denying any wrongdoing. According to the company, only accounts found to be engaging in fraud were suspended. Part of the statement said, “All accounts that have been shut down have a reason for it. We will not shut down any account unless they violate our TOS (Terms of Service).”
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