Central Bank of Nigeria Deputy Director Accuses Binance of Unauthorized Transactions
The Central Bank of Nigeria (CBN) has accused cryptocurrency exchange Binance of conducting transactions reserved for authorized banks and financial institutions, sparking a legal battle that has captured the attention of the financial world.
Olubukola Akinwumi, the deputy director of the CBN, made the accusations during his testimony in a lawsuit brought by the Economic and Financial Crimes Commission (EFCC) against Binance and its executive, Tigran Gambaryan. The lawsuit alleges that Binance and Gambaryan were involved in money laundering activities totaling $35.4 million.
Akinwumi testified that Binance allowed Nigerian users to use pseudonyms to conduct transactions on its platform, in violation of CBN rules that require parties to disclose their true identities in financial transactions. He also highlighted that Binance’s peer-to-peer (P2P) platform facilitated the direct transfer of the Nigerian fiat currency, Naira, which is against CBN regulations.
Despite Binance discontinuing its P2P feature for Nigerians in February following government scrutiny, Akinwumi pointed out that the exchange still allowed users to deposit and withdraw Naira using a ‘cash link,’ a regulated activity under the CBN’s purview. He emphasized that Binance is not licensed by the CBN as a payment service provider.
The ongoing trial is set to resume on July 16, with Akinwumi scheduled to be cross-examined. The legal battle comes amidst Nigeria’s crackdown on crypto service providers, initiated after the country’s National Security Adviser labeled crypto trading as a national security threat. The CBN had only lifted a two-year ban on crypto transactions in December, signaling a shift in the country’s stance towards cryptocurrencies.
Last month, Nigeria’s Securities and Exchange Commission issued a 30-day window for crypto exchanges and digital asset traders to re-register their businesses under the new regulatory regime, warning of enforcement actions for non-compliance. The outcome of the legal battle between the CBN and Binance could have far-reaching implications for the cryptocurrency industry in Nigeria and beyond.
