Nigerian Central Bank Accused Binance with Illegal Banking Activities

The Central Bank of Nigeria has accused Binance of conducting unauthorized banking operations, alleging the cryptocurrency exchange provided banking services without necessary licenses. CBN official Olubukola Akinwunmi testified in court, emphasizing regulatory breaches and potential national security risks.

CBN Alleges Binance's Unauthorized Banking Operations and Regulatory Breaches in Court Testimony

The alleged unlawful operations of Binance were emphasized in court on July 5, when a central bank official testified about the absence of the requisite licenses and regulatory approval.

The Central Bank of Nigeria (CBN) accuses Binance, a cryptocurrency exchange, of providing banking services without the necessary authorization.

According to local media, Olubukola Akinwunmi, the head of payment policy and regulation at the CBN, testified before Judge Emeka Nwite of the Federal High Court of Nigeria in Abuja. Akinwunmi argued that Binance's deposit and withdrawal transactions should be restricted to banks and authorized financial institutions.

The Nigerian government has accused Binance and its executives, Tigran Gambaryan and Nadeem Anjarwalla, of a conspiracy to conceal the source of $35.4 million in financial proceeds from illicit activities in Nigeria.

Akinwunmi, who was accompanied by Ekele Iheanacho, the counsel for the Economic and Financial Crimes Commission, made the following statement during the trial: Binance's website deceived Nigerians into utilizing its platform for naira transactions through a cash link. The CBN regulates activities reserved for licensed banks and financial institutions, including fee-free deposits and flat-fee withdrawals, which the platform promoted.

Akinwunmi asserted that Binance facilitated currency conversion from naira to United States dollars, necessitating CBN authorization as an authorized vendor or a Bureau de Change. He emphasized that traders on Binance frequently employ pseudonyms, which violates regulations that mandate the disclosure of true identities in financial transactions.

Court Hears Testimony on Binance's Unauthorized P2P Transactions; Trial Adjourned for Cross-Examination

The witness described the peer-to-peer transaction process on Binance, which involves the purchasing party transferring naira to the selling party's bank account and confirming the transaction on the platform. This action prompts Binance to release the cryptocurrency or fiat currency. Akinwunmi contended that the service is a regulated activity that Binance was not authorized to conduct.

Immediately following Akinwunmi's testimony, the court adjourned until July 16 to allow the defense to conduct cross-examination. Nwite also directed the Nigerian Correctional Services to provide Tigran Gambaryan's medical reports, cautioning that noncompliance would result in repercussions.

The National Security Adviser's classification of cryptocurrency transactions as a national security issue has led to this crackdown on cryptocurrency activities. As Cointelegraph reported, Fintech innovators Opay, Moniepoint, Paga, and Palmpay were instructed by the Central Bank of Nigeria (CBN) to block and report accounts that engage in cryptocurrency transactions.

Binance disabled its peer-to-peer feature for Nigerian users in February due to government scrutiny. Additionally, the SEC requested that the naira be delisted from P2P platforms during a virtual meeting with the Blockchain Industry Coordinating Committee of Nigeria to prevent market manipulation and safeguard the integrity of Nigeria's capital market.

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