An examination of the role of forensic accounting in addressing cryptocurrency fraud in Nigeria: A study of Paxful transactions.
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Background of the Study
Cryptocurrency has gained significant popularity in Nigeria, both as a form of investment and a medium of exchange, due to its decentralized nature and the ease with which transactions can be made across borders (Ogundipe & Adedeji, 2024). However, the rise of cryptocurrencies, including Bitcoin, Ethereum, and others, has led to a surge in fraudulent activities such as Ponzi schemes, phishing attacks, and fake initial coin offerings (ICOs) (Adebayo & Akinbo, 2023). The anonymity and untraceable nature of cryptocurrency transactions make it difficult for traditional law enforcement mechanisms to detect and prevent fraud effectively.
Paxful, a peer-to-peer cryptocurrency trading platform, has become increasingly popular in Nigeria. Despite its popularity, the platform has been associated with a range of fraudulent activities, including scams that target unsuspecting users (Bello & Faruk, 2024). These fraudulent activities include fake escrow services, phishing, and fake trade offers. Given the complexity and technicality of cryptocurrency transactions, forensic accounting techniques have emerged as a key tool in investigating and detecting cryptocurrency fraud (Oluwaseun & Olamide, 2025). Forensic accountants utilize specialized skills to trace cryptocurrency transactions, identify suspicious activities, and recover lost funds, providing valuable support in fraud investigations.
This study examines the role of forensic accounting in addressing cryptocurrency fraud in Nigeria, with a focus on Paxful transactions. By investigating how forensic accounting techniques can be applied to detect and prevent fraudulent activities on cryptocurrency platforms, this research aims to offer practical solutions for tackling the growing issue of cryptocurrency fraud in Nigeria.
Statement of the Problem
Cryptocurrency fraud has become a significant issue in Nigeria, particularly with the increasing number of users engaging in transactions on platforms like Paxful. Despite the growing popularity of these platforms, the lack of regulatory oversight and the difficulty in tracing cryptocurrency transactions make it challenging for traditional fraud detection systems to identify fraudulent activities (Ogundipe & Adedeji, 2024). The role of forensic accounting in addressing these challenges remains underexplored in the Nigerian context, despite its potential to enhance fraud detection and investigation in cryptocurrency transactions. This research aims to fill this gap by examining how forensic accounting can help address cryptocurrency fraud in Nigeria, particularly on Paxful, and explore its effectiveness in detecting and preventing fraudulent activities.
Objectives of the Study
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To evaluate the role of forensic accounting in detecting cryptocurrency fraud on Paxful in Nigeria.
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To examine the effectiveness of forensic accounting techniques in investigating cryptocurrency-related fraud.
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To assess the challenges faced by forensic accountants in addressing cryptocurrency fraud in Nigeria.
Research Questions
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How can forensic accounting be used to detect cryptocurrency fraud on Paxful in Nigeria?
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What forensic accounting techniques are effective in investigating cryptocurrency-related fraud in Nigeria?
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What challenges do forensic accountants face in addressing cryptocurrency fraud in Nigeria?
Research Hypotheses
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Forensic accounting plays a significant role in detecting cryptocurrency fraud on Paxful in Nigeria.
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Forensic accounting techniques are effective in investigating cryptocurrency-related fraud in Nigeria.
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Forensic accountants face significant challenges in addressing cryptocurrency fraud in Nigeria.
Scope and Limitations of the Study
This study focuses on the role of forensic accounting in detecting and addressing cryptocurrency fraud on the Paxful platform in Nigeria. The scope includes evaluating forensic accounting techniques, their effectiveness, and the challenges faced in cryptocurrency fraud investigations. Limitations include access to transaction data on Paxful, the technical complexity of cryptocurrency transactions, and the relatively short timeframe to assess long-term effects of forensic accounting practices.
Definitions of Terms
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Forensic Accounting: The application of accounting skills to investigate financial fraud, misconduct, and illicit activities, including those related to cryptocurrency.
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Cryptocurrency Fraud: Fraudulent activities involving the illegal or deceptive use of cryptocurrency, such as scams, Ponzi schemes, or phishing attacks.
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Paxful: A peer-to-peer cryptocurrency trading platform that allows users to buy and sell cryptocurrencies directly with each other.
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Digital Forensic Accounting: The use of forensic accounting techniques to investigate and analyze digital transactions, particularly in the context of cybercrime and fraud.
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