The Future of Blockchain Litigation: Trends to Watch in 2025

As a litigation lawyer who have practiced litigation for close to two decades, I often advise clients on navigating the intersection of blockchain and Nigerian law.Blockchain technology, known for secure, transparent transactions, has transformed sectors like finance, supply chains, and governance. According to Chainalysis 2024 data,Nigeria ranks second globally in cryptocurrency use, but the rising adoption of blockchain also fuels disputes. Blockchain litigation involves legal actions over smart contracts, crypto transactions, token disputes, and regulatory breaches. With the Investments and Securities Act (ISA 2025) now in force, the legal landscape is clearer yet complex. This guide, rooted in Nigerian common law and recent regulatory shifts, offers practical insights into 2025 trends.

1. Regulatory Clarity Driving Litigation Under ISA 2025

The Investments and Securities Act (ISA) 2025, enacted on March 31, 2025, redefines blockchain litigation in Nigeria by classifying digital assets like cryptocurrencies and tokenized securities as “securities” under Section 357. Replacing the 2007 Act, it empowers the Securities and Exchange Commission (SEC) to regulate virtual asset service providers (VASPs). All VASPs targeting Nigerians—local or foreign—must obtain an SEC license, adhere to anti-money laundering (AML) and know-your-customer (KYC) rules, and join programs like the Accelerated Regulatory Incubation Program (ARIP).

Provisional approvals for platforms like Quidax and Busha in 2024 reflect this shift because non-compliance triggers enforcement.This clarity drives litigation in two ways: SEC enforcement against unlicensed operators, as seen in the Federal High Court suit against Binance (FHC/ABJ/CS/1444/2024), where the Federal Inland Revenue Service claims $2 billion in taxes and $79.5 billion for economic sabotage, and private investor suits alleging fraud or misrepresentation, now enforceable under securities lasmarAs it stands, businesses must audit smart contracts for SEC compliance to avoid class actions under the Consumer Protection Council Act. Penalties for non-compliance include fines up to N500 million or imprisonment for Ponzi promoters.Globally, the U.S. SEC’s dismissals of cases against Coinbase and Ripple in 2025 signal a shift to structured oversight, mirrored in Nigeria.

The Central Bank of Nigeria (CBN)’s reversal of its 2021 crypto ban in December 2023 aligns with SEC rules, allowing banks to serve licensed VASPs but exposing them to liability for unlicensed trades. To avoid litigation headache and fines beyond finance, fintech founders should integrate ISA 2025 disclosures into whitepapers, while investors must verify platform licensing via the SEC portal The National Judicial Council’s 2024 reports project a 30-50% rise in blockchain-related filings in Federal High Courts by year-end due to this regulatory backbone.

Tokenized real-world assets, like property deeds, will test jurisdictional boundaries under the Land Use Act 1978. Courts may adapt common and statutory laws and precedents for crypto recovery, using Section 315 of the Evidence Act 2011 for digital proof. Practitioners should prepare for hybrid hearings, blending physical and blockchain evidence. While ISA 2025 fosters innovation—evidenced by the NIBSS-Zone blockchain POS partnership in August 2024—it demands vigilance to navigate the litigious landscape.

2. Smart Contracts: Emerging Disputes and Enforcement Challenges

Smart contracts, self-executing code on blockchains like Ethereum, promise efficiency but spark unique disputes in Nigeria’s 2025 legal scene. With no direct judicial precedents, disputes often settle out-of-court, but ISA 2025’s recognition of digital assets as securities enhances enforceability. Under common law contract principles, smart contracts are valid if they meet offer, acceptance, and consideration, bolstered by electronic signatures under the Cybercrimes Act 2015. However, code bugs or oracle failures can trigger breaches, leading to suits akin to traditional contract claims.Cross-border smart contract disputes are rising, driven by Nigeria’s $20 billion remittance economy (World Bank). A Lagos freelancer’s Ethereum payment locked in a faulty escrow contract might require interim orders under the Administration of Criminal Justice Act 2015, freezing assets via tools like Chainalysis The SEC’s Digital Asset Rules mandate risk disclosures in whitepapers, with non-compliance inviting probes. In 2025, Federal High Courts may pilot blockchain forensics, as in the Binance case, using immutable ledgers as evidence under Section 84 of the Evidence Act.Immutability poses challenges for remedies like rectification. Courts may draw from global cases like In re QuadrigaCX (2019) or Singapore’s B2C2 Ltd v Quoine Pte Ltd (2019), ruling code as binding. Nigerian lawyers recommend hybrid clauses, smart code, and arbitration under the Arbitration and Mediation Act 2023 for flexibility. Developers should embed dispute resolution oracles like Kleros to reduce court loads. Investors must review code audits, as unverified contracts risk losses, like the N2 billion DeFi hacks in 2024. NITDA’s updated National Blockchain Policy (2025) promotes smart contracts for procurement, potentially sparking government vs. vendor suits, setting tort precedents for coding negligence.

3. Crypto Fraud and Recovery: Strengthening Investor Protection

Crypto fraud, from rug pulls to phishing, dominates 2025 blockchain litigation, with ISA 2025 empowering the SEC to act swiftly. Nigeria’s 32% crypto penetration (Chainalysis) amplifies risks, with N5 billion lost to scams in 2024 (EFCC). Unregistered offerings are now illegal securities, enabling civil suits for rescission and criminal charges under the Advance Fee Fraud Act 2006. Victims can seek EFCC or ICPC freezing orders, tracing funds on public ledgers.Blockchain analytics, like Chainalysis tools, partnered with the SEC, map illicit flows, admissible as expert evidence. Class actions under the Federal Competition and Consumer Protection Commission Act 2018 are gaining traction for mass frauds, like memecoin pumps (e.g., $DAVIDO warnings). Courts may adopt tornado cash precedents, sanctioning mixers as money laundering aids. P2P trades on Binance remain vulnerable, with 2024 arrests fueling platform negligence suits. Victims should report to EFCC’s cyber unit within 72 hours, preserving wallet screenshots, while perpetrators face up to 20 years under ISA 2025.The CBN-SEC framework (October 2025) mandates bank reporting of suspicious crypto inflows, aiding traces but raising privacy concerns under the NDPA 2023. VASPs must segregate client assets or risk director liability. Investors should use hardware wallets, verify two-factor setups, and diversify into regulated stablecoins like USDT on licensed exchanges. As DeFi grows, projected 40% rise, yield farm disputes will test misrepresentation claims, but 2025’s tools empower recovery with diligent action.

4. Cross-Border Blockchain Disputes in Nigeria’s Global Trade

Nigeria’s status as Africa’s largest economy makes cross-border blockchain litigation inevitable in 2025, especially with tokenized trade finance. Jurisdictional disputes—like a Kano exporter’s Bitcoin payment defaulting via a Dubai smart contract—fall under High Court (Civil Procedure) Rules, invoking private international law ISA 2025 extends SEC rules to foreign VASPs targeting Nigerians, allowing service via cryptographic addresses under proposed Evidence Act amendments. Enforcement uses the New York Convention, ratified via the Arbitration Act, for arbitral awards on platforms like Kleros. Anonymity challenges may prompt doxxing orders under cybercrime laws. Trends show increased Hague Convention applications for asset freezes abroad, as in 2024’s remittance fraud cases. Businesses should embed Nigerian governing law in contracts, using UNCITRAL Model Law for e-commerce. Partner with international firms for dual jurisdiction clauses and trace assets via tools like TRM Labs. With AfCFTA, blockchain supply chains will spark IP disputes under the Patents and Designs Act, promising efficient resolutions with preparation.

5. The Role of Technology in Streamlining Blockchain Court Proceedings

Digital courts are reshaping 2025 blockchain litigation, with Supreme Court Rules 2024 mandating e-filing and virtual hearings under the NJC’s tech roadmap. Blockchain evidence, immutable ledgers,.streamlines proof under Section 89 of the Evidence Act, reducing forgery claims. AI-assisted case management in Federal High Courts piloted for crypto suits and cuts timelines from years to months. Challenges include the digital divide in rural areas; lawyers should train via NBA CLE on tools like DocuSign for affidavits. Estonia’s e-courts inspire Nigeria’s push, and adopting VR for cross-exams in international cases ensures fair, fast justice.

6. Decentralized Finance (DeFi) and Regulatory Scrutiny in Litigation

DeFi’s borderless lending fuels disputes in Nigeria, with ISA 2025 classifying centralized yields as securities. Litigation surges over impermanent loss or flash loan attacks, treated as tort breaches. SEC sandboxes test protocols, but unlicensed DeFi faces shutdowns. DAO governance suits, like U.S. precedents, test corporate veil. Developers should use permissioned chains for compliance; investors, and cap exposure at 5%. The CBN-SEC framework projects DeFi driving N1 trillion in GDP but requires audited oracles to avert claims.

7. Preparing for Blockchain Litigation: Practical Steps for Nigerians

To mitigate 2025 risks, conduct SEC-compliant audits, insure via blockchain policies, and litigate via arbitration. Document wallets and transaction hashes as evidence. Fintechs must align with ISA 2025, investors verify licenses, and all consult experts early. Nigeria’s blockchain future is bright but demands wise litigation strategies.