The Binance cryptocurrency platform has come under fire from the Central Bank of Nigeria (CBN) for allowing unauthorised deposits and withdrawals on its platform that were intended for banks and other approved financial institutions.
 Justice Emeka Nwite of the Federal High Court in Abuja was informed on Friday by Dr. Olubukola Akinwunmi, Head of Payment Policy and Regulation Division at the CBN, that the deposits and withdrawals made on the Binance platform were within the purview of the apex bank’s authorization for Nigerian banks.
According to reports by The News Chronicles, the Nigerian government has charged Binance, its executives Tygran Gambaryan and the evading Nadeem Anjarwalla, with plotting to hide the source of the $35,400, 000 in financial proceeds that they allegedly received from illegal activities in Nigeria.
According to the Nigerian authorities, they violated Section 21(a) of the Money Laundering (Prevention and Prohibition) Act, 2022, and are subject to punishment under Section 18(3).
What happened throughout the trial
The Economic and Financial Crimes Commission (EFCC) attorney, Ekele Iheanacho, led the CBN employees in testifying before the court, stating that the Binance website persuaded a large number of Nigerians to quickly deposit and withdraw NGN or naira on Binance through a cash link.
He added that the Binance website also stated that it “does not charge deposit fees. Users pay a fixed fee for each withdrawal to cover the transaction costs of transferring bitcoin from their Binance account.”
The Central Bank of Nigeria has issued licences to banks and other financial organisations, he clarified, “for the purpose of regulating the deposit and withdrawal of naira.”
He insisted that Binance did not have permission to conduct these kinds of transactions on its network.
In addition, he stated that Binance made it easier to convert Naira to dollars, but that kind of service also needed CBN approval, either as a Bureau de Change or as an authorised donor.
Additionally, he informed the court that foreign exchange traders on Binance “normally trade in pseudonyms,” concealing their names in defiance of applicable laws.
The witness explained,
“The seller will provide a bank account to which the buyer can send or transfer the naira amount.
“Once the buying party has deposited the agreed-upon sum, he clicks on a specific icon on the Binance platform to communicate this.
“On behalf of the selling party, the Binance platform will await confirmation before releasing the cryptocurrency or fiat currency.
“All of these procedures for the peer-to-peer (naira) transaction were made possible by the Binance platform.”
The witness was questioned, and the court postponed until July 16 so that the defence could cross-examine the witness.
In addition, Justice Nwite warned the Nigerian Correctional Services not to disobey the court’s orders and demanded that they submit the medical records for Tigran Gambaryan that day.
He went on to say that should the medical report not be produced, the prison service’s physician would need to appear in court.
More Insights
The Securities and Exchange Commission (SEC) director testified in court that the Binance platform was used as a benchmark to determine the exchange rate for Nigeria.
All parties involved in the capital market, as well as any products that are to be exchanged on the market and any trading platforms, must register with the SEC, a Federal Government agency.
The SEC also creates capital market rules and regulations, supervises the market, and carries out investigations and enforcement studies.
According to news heard by TNC, peer-to-peer, or P2P, trading is a preferred way to purchase and sell cryptocurrencies.
In a manner akin to a marketplace, the buyer and seller are linked.
The EFCC and FIRS have filed two separate lawsuits against Binance and its officials; the first alleges tax evasion, while the second charges money laundering and violating foreign exchange laws.
The News Chronicles that the executives, alleging a breach of their constitutional right to liberty, have also filed a fundamental rights lawsuit against Nigerian government institutions.
Two senior Binance officials, 39-year-old American Tigran Gambaryan, the company’s head of financial crime compliance, and 37-year-old British-Kenyan Nadeem Anjarwalla, the regional manager for Africa, were taken into custody by Nigerian police on February 28.
