Regulation
Witness in Nigerian case against Binance accuses platform of violating central bank rules
Olubukola Akinwumi, deputy director of the Central Bank of Nigeria (CBN), has accused Binance to carry out transactions reserved for banks and authorized financial institutions on Friday, according to a local media outlet relationship.
Akinwumi’s allegations were part of his testimony in the case filed by the Economic and Financial Crimes Commission (EFCC) against Binance and its executive, Tigran Gambaryan.
Akinwumi is the second witness in the ongoing trial, in which Binance and its executive are accused of allegedly laundering $35.4 million in money.
Akinwumi testified that Binance allows Nigerian users to use pseudonyms to conduct transactions on its platform. This is in direct violation of CBN rules, which require parties to disclose their true identities in financial transactions.
He added that Binance’s peer-to-peer (P2P) platform, which helps users make direct transactions, includes the transfer of Nigerian fiat currency, the Naira.
Akinwumi said:
“So the Binance platform facilitates all the P2P processes or transactions as I just listed, either using a Nigerian bank account already stored by users on the Binance platform or the naira wallet account provided by the Binance platform.”
Detailing how P2P transactions are happening through the Binance platform, Akinwumi explained that such transactions were against CBN rules. It is worth noting, however, that Binance has discontinued its P2P functionality for Nigerians following government scrutiny in February.
The witness also pointed out that Binance allows Nigerians to deposit and withdraw Naira from the platform using a “cash link.” However, depositing and withdrawing Naira is a regulated activity under the purview of the CBN. Binance, the witness noted, is not licensed by the CBN as a payment service provider.
Akinwumi will be cross-examined on July 16, when the trial resumes.
The crackdown on crypto service providers in Nigeria began after the country’s National Security Advisor (NSA) labeled cryptocurrency trading as a threat to national security. The NSA classification marked a significant shift in the country’s stance on cryptocurrencies: the CBN only lifted a two-year ban on cryptocurrency transactions last December.
Last month, Nigeria’s Securities and Exchange Commission (SEC) issued a 30-day window for cryptocurrency exchanges and digital asset traders to re-register their businesses under the new regime. The SEC also warned of enforcement actions in the event of non-compliance.