Olubukola Akinwumi, the deputy director of the Central Bank of Nigeria (CBN), recently accused Binance, a popular cryptocurrency exchange platform, of conducting transactions that are reserved for authorized banks and financial institutions. This accusation came to light during Akinwumi’s testimony in a lawsuit brought forth by the Economic and Financial Crimes Commission (EFCC) against Binance and its executive, Tigran Gambaryan.
Akinwumi’s testimony revealed that Binance allegedly enables Nigerian users to use pseudonyms when conducting transactions on its platform. This practice directly contradicts the rules set by the CBN, which require parties to disclose their true identities in financial transactions. Additionally, Akinwumi pointed out that Binance’s peer-to-peer (P2P) platform, which facilitates direct transactions, involves the transfer of the Nigerian fiat currency, Naira. These transactions, according to Akinwumi, go against the regulations outlined by the CBN.
It is important to note that Binance halted its P2P feature for Nigerians in February due to increased government scrutiny. Despite this, Akinwumi highlighted that Binance still allows Nigerians to deposit and withdraw Naira from the platform using a ‘cash link’. Such activities, involving the depositing and withdrawing of Naira, are regulated by the CBN. It is worth mentioning that Binance is not licensed by the CBN as a payment service provider, raising concerns about compliance with financial regulations.
The crackdown on crypto service providers in Nigeria started after the country’s National Security Adviser labeled crypto trading as a national security threat. This classification marked a significant shift in the country’s approach to cryptocurrencies, especially considering that the CBN had lifted a two-year ban on crypto transactions just the previous December. In an effort to regulate the sector, Nigeria’s Securities and Exchange Commission (SEC) recently mandated a 30-day window for crypto exchanges and digital asset traders to re-register their businesses under the new regulatory framework, with warnings of enforcement actions for non-compliance.
As the accusations against Binance unfold in the ongoing trial, the spotlight is on the crypto industry in Nigeria and the regulatory challenges it faces. The testimonies presented by Akinwumi shed light on the alleged violations by Binance and the broader implications for cryptocurrency exchanges operating in the country. It remains to be seen how this legal battle will shape the future of crypto regulations in Nigeria and how companies like Binance will adapt to comply with evolving financial laws.
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