Frozen Crypto Wallets Linked to Nigeria Protests Are Still Active: Report

Cryptocurrency wallets allegedly connected to #EndBadGovernance protesters in Nigeria are reportedly active and performing transactions, despite a court order to freeze them.

The wallets contain over $37 million and were ordered to be frozen by Judge Emeka Nwite on July 9, according to a recent report by local news outlet Premium Times. However, an investigation by Techpoint Africa identified discrepancies between court documents and blockchain data, indicating these wallets may not have been fully restricted.

For example, the investigation found a wallet listed in court records as holding $967 showing a later balance of $172. Another wallet cited as containing $443,512 displayed a balance of $233,574. This wallet, reportedly linked to crypto exchange KuCoin, continues to process transactions, including a recent transfer of $50,000 to an unidentified wallet.

Slava Demchuk, CEO of blockchain forensics and compliance firm AMLBot, explained that in the case of activist groups, “the funds are being raised via crypto to maintain the anonymity of the senders.” He pointed out, however, that open-source intelligence tools can often help “identify these wallet addresses from such campaign pages and then monitor where the funds came from and where they are being sent to.”

The involvement of exchanges like KuCoin and MEXC complicates things. While wallet owners' identities remain undisclosed, these exchanges may have been compelled to share account information with Nigerian authorities. A crypto forensics expert told Techpoint Africa that the government can request support from exchanges during investigations—but that exchanges often decline requests that they deem unnecessary.

The Economic and Financial Crimes Commission (EFCC), which requested the wallet freeze, cited investigations into money laundering and terrorism financing. But sources quoted by Premium Times say the targets may be organizers of the #EndBadGovernance protests.

The #EndBadGovernance protests are a series of nationwide demonstrations in Nigeria triggered by the country's economic crisis. Protesters rallied against rising living costs, record inflation, and food price increases, which many attributed to President Bola Tinubu's economic reforms. These reforms included the removal of fuel subsidies and the devaluation of the Naira.

The protests, which began peacefully but turned violent in some areas, resulted in multiple casualties and arrests. Demonstrators called for policy changes and expressed frustration with the government's handling of the economic situation.

The discrepancies in wallet balances and continued transaction activity raise questions about the enforceability of court-ordered freezes on cryptocurrency assets. The global, decentralized nature of blockchain networks presents challenges for attempts at control by individual jurisdictions.

Demchuk pointed out that since the introduction of centralized stablecoins with a freeze function in their smart contract, “non-custodial wallets can only be frozen via Tether (USDT) and Circle (USDC),” while most holdings cannot be externally controlled. He explained that the firms behind those stablecoins “work actively and willingly with law enforcement agencies to identify and freeze wallets involved in malicious activities.”

The scenario bears similarities to events during the 2020 #ENDSARS protests against police brutality, Premium Times noted. The Nigerian government at the time blocked bank accounts associated with demonstrators, leading many to use cryptocurrencies as an alternative funding method.

Edited by Ryan Ozawa.