Nigeria’s CBN Accuses Binance of Unauthorized Banking Activities through Naira P2P
The Central Bank of Nigeria (CBN) has criticized Binance for conducting unauthorized deposit and withdrawal services, which are typically reserved for banks and licensed financial institutions.
Binance, along with its executives, is facing serious allegations of money laundering, foreign exchange contravention, and conspiracy to conceal financial proceeds. The Nigerian government has highlighted transactions worth $35,400,000 in these allegations. The trial has revealed that Binance facilitated peer-to-peer transactions involving the naira without proper authorization, raising concerns about its impact on Nigeria’s exchange rate and regulatory compliance.
Unauthorized Banking Activities
Dr. Olubukola Akinwunmi, Head of the Payment Policy and Regulation Division at the CBN, testified before Justice Emeka Nwite of the Federal High Court in Abuja. He stated that the deposit and withdrawal transactions conducted on the Binance platform were activities exclusively authorized for banks by the CBN.
Nairametrics reports that the Nigerian government has accused Binance and its executives, Tygran Gambaryan and the fleeing Nadeem Anjarwalla, of conspiring to conceal the origin of financial proceeds from their alleged unlawful activities in Nigeria. These activities allegedly contravene Section 21(a) and are punishable under Section 18(3) of the Money Laundering (Prevention and Prohibition) Act, 2022.
Trial Proceedings
During the trial, led by EFCC counsel Ekele Iheanacho, Dr. Akinwunmi explained that the Binance website convinced many Nigerians to swiftly deposit and withdraw naira via a cash link. He noted that Binance’s platform claimed not to charge deposit fees, with a flat fee for each withdrawal to cover transaction costs.
Dr. Akinwunmi emphasized that depositing and withdrawing naira is a regulated activity that requires CBN authorization, which Binance did not have. He also pointed out that Binance facilitated the conversion from naira to dollars, a service that also requires CBN authorization, either as an authorized dealer or as a Bureau de Change.
Additionally, the CBN official highlighted that traders on Binance often use pseudonyms, making it difficult to identify them and contravening relevant laws. He detailed how the peer-to-peer transactions worked on Binance, describing the steps involved in transferring funds and releasing cryptocurrency or fiat currency.
Following the witness examination, the court adjourned to July 16 for the defense’s cross-examination. Justice Nwite also ordered the Nigerian Correctional Services to produce medical reports for Tygran Gambaryan, warning of consequences for non-compliance.
Credit: Nairametrics
