Regulation
Nigerian Binance users are making transactions using fictitious names, CBN official says
A Central Bank of Nigeria (CBN) official has testified that Nigerian users of cryptocurrency exchange Binance are making transactions using fictitious names, potentially complicating the ongoing legal battle between the cryptocurrency exchange and Nigerian authorities.
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- According to a Nigerian news agency relationshipOlubukola Akinwumi, Deputy Director of CBN, testified on Friday, July 5, before Justice Emeka Nwite of the Federal High Court in Abuja.
- Akinwumi explained that Binance users in Nigeria often use pseudonyms to hide their identities when trading on the platform.
- The testimony is part of the ongoing trial against Binance and its executive, Tigran Gambaryan, who are facing $35.4 million in money laundering charges.
Akinwumi, head of the Payments Policy and Regulation Division in the Payment Systems Management Department of the CBN, said:
“We observed in doing so […] Binance provides a trading platform where users trade virtual assets. And to complete their transactions for the purpose of settling payments, users use the payment system for the purpose of transferring or making payments to each other. These traders typically trade under pseudonyms (pseudonyms) that hide their identities and are not authorized by the CBN.”
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- The CBN official said that naira withdrawal and deposit services “are a regulated activity carried out by banks and other financial institutions duly registered by the CBN,” adding that Binance does not have a license to operate in Nigeria.
- Akinwumi described how Binance’s peer-to-peer (P2P) platform facilitates transactions between users, allowing them to exchange virtual assets and fiat currency.
- He explained that users can deposit and withdraw Nigerian Naira (NGN) on the platform, an activity usually regulated by the CBN.
💭 Oluwaseun’s Opinions
The ongoing lawsuit against Binance may one day be an MBA case study in how not to regulate a new market.
“The future requires that as regulators we should be both proactive and adaptable, continually evolving our approaches to keep pace with technological advances. This will involve adopting new regulatory frameworks, using advanced technologies for supervision, and maintaining a flexible mindset to accommodate rapid changes in the industry.”
- Indeed, the regulator is demonstrating congruence between rhetoric and action. South Africa is the only major African economy with a functioning cryptocurrency regulatory regime.
- The FSCA has recently granted 63 additional licenses for cryptocurrency companiesbringing the total number of licenses to 138.
- This also announced that it is currently investigating 30 cryptocurrency casesHowever, these investigations began only after clear rules were established.
- In her speech, Kamlana highlighted how effective regulation is attracting investment to South Africa.
From conversations I’ve had with industry stakeholders, a recurring theme emerges: Nigeria’s authoritarian approach is eroding trust in the Nigerian cryptocurrency market.
- Some of the most talented builders I know have shifted their focus away from Nigeria. There is a growing theme of “building for the world” among them.
- A builder told me:
“Everything I do now is more global and focused on the emerging on-chain economy. No longer focused on Nigeria/Africa. I think more operators and builders in the space should do the same.”
- The unpredictability of the Nigerian regulatory environment will continue to push cryptocurrency innovation and investment towards more stable markets.
- Ultimately, Nigeria is bound to be the biggest loser.
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Mariblock has published a Nigeria vs. Binance Timeline report related to this story. You can get the full backstory there.