The Central Bank of Nigeria (CBN) claims that crypto exchange Binance has been offering banking services without the required authorization.
Olubukola Akinwunmi, the head of payment policy and regulation at CBN, testified in court that Binance’s deposit and withdrawal transactions should only be handled by banks and authorized financial institutions. This testimony was given before Judge Emeka Nwite at the Federal High Court in Abuja.
Allegations of Illegal Financial Activities
The Nigerian government has accused Binance and its executives, Tigran Gambaryan and Nadeem Anjarwalla, of hiding the origins of $35.4 million from illegal activities in Nigeria. Akinwunmi stated that Binance misled Nigerians into using its platform for naira transactions by promoting fee-free deposits and flat-fee withdrawals. These activities are regulated by the CBN and reserved for licensed banks.
Akinwunmi also claimed that Binance facilitated currency conversion from naira to U.S. dollars without proper authorization. This service requires a license from CBN as an authorized dealer or Bureau de Change. He noted that traders on Binance often use pseudonyms, violating laws that require the disclosure of true identities in financial transactions.
Details of Binance’s Transactions
Akinwunmi explained how Binance’s peer-to-peer transaction process works. The buyer transfers naira to the seller’s bank account and confirms the transaction on the platform. This action prompts Binance to release the cryptocurrency or fiat currency. Akinwunmi argued that this service is regulated and that Binance was not authorized to perform it.
After Akinwunmi’s testimony, the court adjourned the case until July 16 for the defense’s cross-examination. Judge Nwite also ordered the Nigerian Correctional Services to produce Tigran Gambaryan’s medical reports, warning of consequences for noncompliance.
Government Crackdown on Crypto
This case is part of a broader crackdown on cryptocurrency activities in Nigeria. The National Security Adviser has classified cryptocurrency trading as a national security issue. The CBN has directed fintech startups like Opay, Moniepoint, Paga, and Palmpay to block and report accounts involved in cryptocurrency transactions.
In February, Binance disabled its peer-to-peer feature for Nigerian users due to government scrutiny. Additionally, during a virtual meeting with the Blockchain Industry Coordinating Committee of Nigeria, the SEC called for measures to delist the naira from P2P platforms to prevent market manipulation and protect Nigeria’s capital market.
