Olubukola Akinwumi, the deputy director of the Central Bank of Nigeria (CBN), recently accused Binance, a popular cryptocurrency exchange, of conducting transactions that are reserved for authorized banks and financial institutions. Akinwumi’s accusations came to light during his testimony in a lawsuit brought by the Economic and Financial Crimes Commission (EFCC) against Binance and its executive, Tigran Gambaryan.
The ongoing trial centers around the alleged money laundering activities carried out by Binance, amounting to $35.4 million. Akinwumi revealed that Binance allows Nigerian users to use pseudonyms to conduct transactions on its platform, which directly violates the CBN’s rules requiring parties to disclose their true identities in financial transactions.
Violation of CBN Rules
According to Akinwumi, the Binance peer-to-peer (P2P) platform enables users to transact directly with each other, involving the transfer of the Nigerian fiat currency, Naira. This method of transactions goes against the rules set by the CBN. It is important to note that following government scrutiny in February, Binance discontinued its P2P feature for customers in Nigeria.
Akinwumi highlighted that Binance allows Nigerians to deposit and withdraw Naira from the platform using a ‘cash link.’ However, such activities are regulated under the purview of the CBN, and Binance is not licensed by the central bank as a payment service provider. The upcoming cross-examination of Akinwumi on July 16 will likely shed more light on the matter.
Nigeria’s Stance on Crypto
The crackdown on crypto service providers in Nigeria gained momentum after the National Security Adviser (NSA) classified crypto trading as a national security threat. This move marked a significant shift from the CBN’s decision to lift a two-year ban on crypto transactions in December. In response to the changing regulatory landscape, Nigeria’s Securities and Exchange Commission (SEC) recently issued a 30-day window for crypto exchanges and digital asset traders to re-register their businesses under the new regime, threatening enforcement actions for non-compliance.
The accusations leveled against Binance by the CBN and the ongoing legal battle highlight the challenges faced by cryptocurrency exchanges in navigating regulatory frameworks in different countries. The outcome of this trial could have far-reaching implications for the crypto industry in Nigeria and beyond.
