The Central Bank of Nigeria’s Accusations Against Binance: What You Need to Know

The Central Bank of Nigeria’s deputy director, Olubukola Akinwumi, recently made some serious accusations against popular cryptocurrency exchange Binance. Akinwumi accused Binance of facilitating transactions that are typically reserved for authorized banks and financial institutions. These accusations were part of his testimony in a lawsuit filed by the Economic and Financial Crimes Commission (EFCC) against Binance and its executive, Tigran Gambaryan. The lawsuit alleges that Binance was involved in money laundering activities totaling $35.4 million.

Akinwumi testified that Binance’s platform allows Nigerian users to conduct transactions using pseudonyms, which goes against the Central Bank of Nigeria’s rules. The CBN requires parties to disclose their true identities in financial transactions to prevent illegal activities such as money laundering. Additionally, Binance’s peer-to-peer (P2P) platform, which facilitates direct transactions between users, involves the transfer of the Nigerian fiat currency, Naira. This practice was deemed as a violation of the CBN’s regulations.

It is important to note that Binance discontinued its P2P feature for Nigerians in response to government scrutiny earlier this year. Despite this action, Akinwumi pointed out that Binance still allows Nigerians to deposit and withdraw Naira from the platform using a ‘cash link.’ However, these activities are regulated by the CBN, and Binance is not licensed as a payment service provider in Nigeria. Akinwumi is scheduled to be cross-examined on July 16 as the trial continues.

The crackdown on cryptocurrency service providers in Nigeria began after the country’s National Security Adviser (NSA) classified crypto trading as a national security threat. This move signaled a shift in the country’s stance towards cryptocurrencies, as the CBN had only lifted a two-year ban on crypto transactions in December. Recently, the Nigeria Securities and Exchange Commission (SEC) issued a 30-day window for crypto exchanges and digital asset traders to re-register their businesses under the new regulatory regime. Non-compliance could result in enforcement actions by the SEC.