Coin World reports:
In a significant development for Nigeria’s cryptocurrency market, the Central Bank of Nigeria (CBN) has leveled serious allegations against the global cryptocurrency exchange Binance. On Friday, July 5, a CBN official testified in court, stating that Binance had been providing banking services in the country without legal permission and approval. This revelation emerged during the testimony of the applicant at the Federal High Court in Abuja, presided over by Judge Emeka Nwite.
Dr. Olubukola Akinwunmi, CBN’s Director of Payment Policy and Regulation, delivered compelling testimony, accusing Binance of operating without proper authorization. According to Dr. Akinwunmi, the deposit and withdrawal transactions Binance engages in can only be legally executed by licensed banks and financial institutions.
This testimony is part of a broader legal challenge, with Binance and its executives Tigran Gambaryan and the fugitive Nadeem Anjarwalla facing charges of concealing the source of $35,400,000 derived from illegal activities in Nigeria.
The Nigerian government contends that Binance’s website misled users by promoting a platform that facilitates free deposits and fixed-fee withdrawals in Naira. Dr. Akinwunmi emphasized that these activities fall under the regulatory purview of the CBN and are reserved for licensed entities.
He also pointed out that Binance facilitated the conversion of currency from Naira to US dollars, an action that requires explicit CBN authorization, typically granted to authorized dealers or Bureaux de Change.
Furthermore, Dr. Akinwunmi outlined the procedures for P2P transactions on Binance, which make it very challenging for users to complete independently. In these transactions, buyers pay sellers in Naira by transferring to the seller’s bank account and confirming the transaction through the platform to Binance to release the corresponding cryptocurrency or fiat currency. According to Dr. Akinwunmi, this practice constitutes regulated financial services that Binance is not authorized to provide.
The court adjourned the hearing until July 16 to give the defense time for cross-examination. Judge Nwite also ordered the Nigerian Correctional Service to provide a medical report for Tigran Gambaryan, warning of severe consequences for non-compliance.
This legal action is part of a broader crackdown by Nigeria on cryptocurrency activities. The National Security Adviser has classified cryptocurrency transactions as a national security issue, leading the CBN to direct fintech startups like Opay, Moniepoint, Paga, and Palmpay to block and report accounts involved in cryptocurrency transactions. In response to increasingly stringent scrutiny, Binance disabled the P2P feature for Nigerian users in February.
Additionally, during a virtual meeting with the Nigerian Blockchain Industry Coordinating Committee (BICCoN), the US Securities and Exchange Commission called for measures to delist the Naira from P2P platforms to prevent market manipulation and protect the integrity of Nigeria’s capital market.
As the case unfolds, it reveals the challenges and legal hurdles cryptocurrency exchanges face when operating in different countries. The outcome of this legal battle could determine the fate of cryptocurrency business in Nigeria and the entire world.
