4 Startup Scandals That Shook the Nigerian Tech Scene

In a rapidly growing tech ecosystem, Nigerian startups are hailed for their innovation, ambition, and transformative potential, but with great growth often comes scandals.

Nigeria’s startup ecosystem may be booming, but it hasn’t been without turbulence. A number of high-profile scandals have tested the industry’s integrity and spotlighted serious governance weaknesses. These four incidents shook the scene the most.

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4 Startup Scandals That Shook the Nigerian Tech Scene

1. Ezra & Paystack: Resurfaced Tweets and Misconduct Allegations

One of the most recent and explosive controversies involves Ezra Olubi, co-founder and former CTO of Paystack. In November 2025, Paystack suspended him following sexual misconduct allegations involving a subordinate, triggering a formal internal investigation.

The scandal went deeper than the immediate allegation as archived tweets from Olubi between 2009 and 2013 resurfaced, containing highly explicit content, including references to minors, sexualized anime characters, and disturbing workplace commentary.

A former partner, Max “Maki” Obae, also came forward via an X Space session, accusing Olubi of misogyny, manipulation, and leveraging his power and wealth in an exploitative way. She alleged a toxic dynamic, including how he uses money and influence to control and demean.

Paystack suspended Olubi pending the outcome of a “fair, transparent, and structured” review process. They publicly stated it would not comment further until the investigation was complete, citing respect for all parties.

2. Flutterwave: Security Breaches & Cyber-Intrusion Concerns

Flutterwave, one of Nigeria’s flagship fintech firms, has faced its own share of controversy. In May 2024, the company disclosed that it had blocked a “security breach” on its platform, involving a network intrusion. While Flutterwave assured customers that no funds were lost, reports suggested insiders believed as much as ₦11 billion may have been at risk.

This wasn’t the first time Flutterwave had to defend itself publicly. In 2023, it denied a widely reported ₦2.9 billion hack, clarifying that unusual transaction activity was flagged by its system and internal checks, rather than a successful breach.

For a payments company, trust and security are paramount, and even attempted attacks can erode user confidence. It exposed how fintechs must constantly balance rapid growth with strong cybersecurity.

After that episode, Flutterwave alerted law enforcement and handed over details (like IP addresses) of the suspected intruders to security agencies. They also began improving their security infrastructure and migrated affected users to more secure platforms to prevent future risks.

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3. Patricia (Crypto Startup): Hack, Withdrawal Freeze, and Debt Conversion

Patricia Technologies, a Nigerian crypto company, also found itself in the crosshairs after a series of operational crises. According to reports, the platform lost around $2 million to a hack. Beyond the hack, customers claimed they were unable to withdraw funds for months, sparking outrage and panic.

To appease users, Patricia proposed converting customer balances into company shares, effectively asking affected users to accept equity instead of cash. This decision was controversial and raised real concerns about liquidity, trust, and how crypto startups manage user funds.

The incident highlighted how centralized exchanges in Nigeria may be vulnerable to security risks. Patricia reportedly started paying back some customers and engaged publicly to calm its user base, but the hack and withdrawal freeze still left a dent in its reputation.

4. Binance vs Nigeria: Legal Clash Over Taxes & Economic Impact

Perhaps the most headline-grabbing scandal involved Binance, the global cryptocurrency exchange, and the Nigerian government. In early 2025, Nigeria’s Federal Inland Revenue Service (FIRS) sued Binance for $2 billion in unpaid income tax and an additional $79.5 billion for alleged economic damage linked to Binance’s operations in Nigeria.

The key allegations include:

Binance failed to register properly for tax in Nigeria.
It may have contributed to foreign exchange (naira) instability through its P2P trading volumes.
The FIRS claims Binance’s economic presence in Nigeria is “significant,” making the company liable under Nigeria’s tax code.

The legal battle has been dramatic. Two Binance executives, Tigran Gambaryan and Nadeem Anjarwalla, were detained in Nigeria in 2024. A court initially approved “substituted service” (i.e., serving legal documents via email) because Binance doesn’t have a physical office in Nigeria.

Nigeria’s court later admitted FIRS documents linked to Binance’s financial transactions as evidence. The case was adjourned multiple times, once to April 30, 2025, while Binance challenged some of the court’s procedural decisions.

Binance has denied the claims, defending its business model and contesting some procedural aspects of the lawsuit. The legal battle is still playing out; meanwhile, the Nigerian government, represented by FIRS, is pushing hard for massive financial accountability.

The Nigerian tech ecosystem is still youthful, and for all its promise, it is not immune to scandal. For founders, investors, and regulators, building a resilient, credible, and sustainable tech industry in Nigeria requires not just innovation, but integrity, foresight, and a commitment to protecting the ecosystem’s most valuable asset, its reputation.

Source: Pulse