Neusroom Explainer: Why Risevest, Bamboo and others are in CBN trouble

On Tuesday August 17, 2021, Nigeria’s Central Bank froze the accounts of six online investment platforms for 180 days.

The affected platforms were Rise Vest Technologies Limited, Bamboo Systems Technology Limited, and Bamboo Systems Tech. Ltd OPNS. Others are Chaka Technologies Limited, CTL/Business Expenses and Trove Technologies Limited.

The major grouse

This whole drama began when a former Attorney-General of the Federation, Michael Aondoakaa, filed an ex parte motion at the Federal High Court in Abuja on August 4, 2021, seeking temporary freezing of the bank accounts of the firms pending further investigations.

For Aondoakaa, the activities of the owners of these investment schemes was “undercutting the strength of the naira against the United States dollars,” hence the move.

That’s not all. Aondoakaa told the court that the six firms violated the directive issued in TED/FEM/FPC/GEN/01/012 and dated July 1, 2015.

The directive was contained in a letter to all authorised dealers of foreign currency in Nigeria. It was titled Implementation of the Electronic Certificate of Capital Importation.

The document popularly known as a Certificate of Capital Importation (CCI) is a document issued by an authorised dealer (usually a commercial bank licensed by the Central Bank of Nigeria (“CBN”) to deal in foreign exchange) to an investor as evidence of inflow of foreign currency or goods such as plants, equipment, machinery or raw materials, into Nigeria for investment purposes.

Now, what CBN did in the letter referenced as TED/FEM/FPC/GEN/01/012 was to inform everyone that processing of foreign investments in Nigeria will become electronic. This is expected to replace the hardcopy CCI used for foreign outflows in terms of cash or equipment.

The implication will mean that anyone trading foreign currency will have to use a platform controlled by the CBN. This way, the CBN will vet all foreign transactions just the way they are determining the dollar/naira rate. Now the letter, accessed by Neusroom, said the platform should have been in full swing September 11, 2017, approximately four years ago.

Aondoakaa’s grouse was that the six platforms never got on CBN’s platform. This was why he asked the CBN to immediately freeze “all the bank accounts of these platforms held by Zenith Bank, Guaranty Trust Bank, Standard Chartered Bank, Access Bank and VFD Microfinance Bank.”

What are dollar based denominated investments?

Rise Vest Technologies Limited, Bamboo Systems Technology Limited, Bamboo Systems Tech. Ltd OPNS, Chaka Technologies Limited, CTL/Business Expenses and Trove Technologies Limited offer dollar based investments.

These investments help Nigerians to hedge their savings in a more secure platform like dollars where they can reap returns. Naira is already N500 to a dollar or even more, so why save in Cowrywise? Or in a bank? This is why investors have sought for Rise, Bamboo and Chaka to convert Naira to dollar invest in safe programmes like ETFs, S&P 500 firms, real estate and just normal stocks abroad to gain in dollars.

The feeling is good, trust me. Besides, it is safe and can be done by yourself very easily, plus you can see your money growing or dipping. Sometimes, dollar based investments dip based on experience. Also it is different from cryptocurrency.

Back to the story

Aondoakaa has found the first loophole but that was not enough to nail them at court. So a senior supervisor of the CBN, Christiana Gyang tried to break it down on why they believe Risevest is fake.

According to her, Risevest was incorporated in October 2019 with objects of technological and business consultancy. Now, it has a platform for customers to invest in foreign instruments using an app called ‘Risevest. The question is: How come?

She said, “Our review revealed that the company consummated its asset management activities through its account 1017556580 with Zenith Bank Plc, which recorded a turnover of 1.97 billion between January 1, 2019 and April 27, 2021.”

“Inquiries on the transactions confirmed that the transfers to BuyCoins were for the purchase of cryptocurrency,” the affidavit stated, adding that findings showed that “Rise Vest Technologies Limited traded in cryptocurrencies in contravention of the CBN circular referenced BSD/DIR/PUB/LAB/014/001, dated February 5, 2021.”

In essence, Rise moved away from what it was incorporated for and ended up with billions after two years.

The same trend also occurred with Bamboo Systems Technology Limited.

She said, “The company was incorporated in December 2018 to carry on the business of software design, implementation, development, maintenance and consultancy amongst others. It is related to One Global Med. Technology, BSTL Lambeth and Grag Concepts Limited.

“Further reviews showed that Bamboo Systems Technology Limited operates an online App, ‘Bamboo’, that provides a medium for investors to buy and sell stocks, exchange-traded funds (ETFs), Index funds and derivatives listed in major exchanges in the U.S.”

In summary, CBN smells something fishy and for that purpose, the court will freeze their accounts till next year. (Today is day 237 of 336. Add 180 days to it). The period is to investigate whether they are Ponzi schemes or not. Nonetheless, the firms are welcome to appeal. What is confusing is why Chaka is under lock and key, knowing that it just received the Securities and Exchange Commission for digital stock trading in Nigeria in June.

Responding to the reports, Bamboo told its investors that their investors funds are safe

In a statement, the firm tweeted, “We are aware of the recent reports about us. Our legal and government relations teams are looking into it but we thought it was important to let you know that your money remains safe with Bamboo and will always be readily accessible.”

Also, Risevest said, “With regard to the latest news about us and our FX dealings, you can be sure that your investments and funds are safely managed, that funding and withdrawals will continue to be processed as normal, and that our U.S operations remain intact.

“We will work with regulators, as we always have to ensure that all issues raised are properly addressed. However, this does not affect our users or their investments, which are managed by regulated third-parties in all jurisdictions in which we operate.”

The apex bank is yet to respond to these new developments but has however moved to implement the court’s decision.