Digital rights lawyers sue CBN, SEC over cryptocurrency prohibition

A civil society organisation, the Digital Rights Lawyers Initiative, has dragged the Central Bank of Nigeria and Securities and Exchange Commission to court over the recent action of the apex bank that Deposit Money Banks should desist from transacting in and with entities dealing in cryptocurrencies.

In Suit No. FHC/L/CS/ 188/2021 filed on Monday, February 8, 2021 at the Federal High Court in Lagos, the group said the CBN, which is the first defendant, lacked the power to restrict financial institutions from dealing in cryptocurrency transactions.

The digital rights lawyers argued that the second defendant, SEC, had in a circular dated September 14, 2020, declared cryptocurrencies as legal digital assets “protected under section 44 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended)”.

The lawyers, therefore, asked the court to validate the Investments and Securities Act 2007, which made SEC the apex regulatory body of the Nigerian capital market.

They also prayed the court to declare the CBN action as “ultra vires, unconstitutional, null and void” while also seeking a “perpetual injunction restraining the 1st defendant from regulating and/or further regulating virtual currencies/ crypto currencies in Nigeria.”

The suit, which has not yet been assigned to any judge, was filed on behalf of the group by its counsel, Irene Chukwukelu.

It was earlier reported that the apex bank said cryptocurrencies promote illegal activities and raise risks, among other reasons.

The development had generated an uproar with many Nigerians including a former CBN Deputy Governor, Kingsley Moghalu, kicking against the move.

Moghalu had said there was regulatory dysfunction between the CBN and SEC. He had also argued that there was no means of exchange devoid of risk, adding that if the CBN could manage the risks of paper currency and electronic payments and other means of exchange, it should also be able to mitigate the risks associated with digital platforms such as cryptocurrencies.