The Federal High Court has ordered that the bank accounts of suspected cryptocurrency users on ByBit, KuCoin, and other platforms have N548.6 million frozen by Nigeria’s anti-graft agency, the Economic and Financial Crimes Commission (EFCC), because of their alleged involvement in naira fluctuations.
The court froze the cash based on September 3, 2024, request that accused two prominent foreign cryptocurrency sites, ByBit and KuCoin, of contributing to the depreciation of the Nigerian Naira.
This development is part of a larger legal and prosecutorial effort by federal government authorities to deal with claims that international cryptocurrency platforms are evading taxes and violating foreign exchange laws.
Naira fluctuation allegations
Remember that in February 2024, two executives of the cryptocurrency platform Binance were detained by Nigeria’s security agency on the basis of information provided by the National Security Adviser. The information claimed to have involved money laundering and financing of terrorism on specific cryptocurrency exchange platforms.
According to Nairametrics, the EFCC has already filed a lawsuit against Binance and Tigran Gambaryan for $35.4 million worth of money laundering offenses.
ByBit, KuCoin, and several other anonymous cryptocurrency platforms are accused in this most recent motion of facilitating the “price discovery, confirmation, and market manipulation” that led to “distortions in the market, resulting in the naira losing its value against other currencies” by their Nigerian users.
In his affidavit, which Nairametrics exclusively obtained, EFCC investigator Okoro Philip claimed that Nigeria has made significant progress in recent months towards currency stabilization measures by the Federal Government, as demonstrated by the dollar’s trade on the illicit market at N980 to $1.
He continued by saying that these gains were quickly undone on Thursday, April 18, 2024, when the dollar quickly rose on the black market from N1,250 to $1.
“These fluctuations were primarily driven by activities on platforms such as ByBit, KuCoin, and other similar cryptocurrency platforms,” he stated, citing more intelligence and research.
According to him, the 22 bank accounts listed in the motion and located in different Nigerian banks are owned by eager sellers of USDT who give their naira accounts in exchange for the transfer of the USDT’s naira equivalent.
The argued that the people whose accounts were found are users of ByBit, KuCoin, and other international cryptocurrency platforms. These people are not allowed to trade in foreign currencies, advertise, bargain, or exchange cryptocurrency for naira at rates that are harmful to Nigeria’s financial system.
The prosecution levied charges against the cryptocurrency platforms, alleging that they wilfully disregarded Nigeria’s anti-money laundering rules and regulations, allowing their users to conduct business secretly.
“ByBit is a cryptocurrency platform that allows users to swap USDT (a digital dollar) for other currencies such as the naira. One USDT is approximately equal to one US dollar. The exchange rates determined by users of these cryptocurrencies adversely affect the value of the naira by artificially lowering its value.”
In the case identified as FHC/ABJ/CS/543/2024, the official stated, “The proceeds of this manipulation go into the account of the willing seller.”
Additional insights
The EFCC claimed that additional intelligence had shown that these platforms are used to secretly transfer money for terrorist activities and the proceeds of crimes.
The Commission revealed that it has corresponded with every bank where the accounts are located, asking physical copies of the specific account information. This mandate has been followed.
The bank accounts listed in the schedule belong to a number of people, some of whom are either being investigated or prosecuted for money laundering, terrorism financing, and unauthorized foreign exchange dealings. EFCC attorney Ekele Iheanacho urged the court to freeze the bank accounts until the investigation and prosecution are finished.
The accounts of AD Ishola Farms Ltd., Kora Payment Network, and Microcore Tech Investment Services are among those that have been discovered.
On September 4, 2024, Iheanacho moved the application in open court, and Justice Emeka Nwite granted it.
What to note
This most recent event comes after a court decision to freeze 1,146 accounts due to unlawful financial transactions for ninety days, from April 25, 2024, to July 23, 2024.
Later, an impacted party requested that some of the freezing orders be released, and the court granted the motion.
However, after filing criminal charges against some of the account operators, the EFCC submitted a new motion to carry out its probe.
After a crackdown on other exchanges such as Binance, which resulted in the delisting of their peer-to-peer categories, ByBit is still one of the few cryptocurrency exchanges that maintains a peer-to-peer area on its platform.
ByBit is a favorite among Nigerian cryptocurrency traders and provides choices for cryptocurrency trading on its platform. Cryptocurrency trade has been categorised as a national security threat by Nigeria’s National Security Adviser (NSA).
As a result, OPay, Palmpay, Moniepoint, Kuda, and Paga were among the five fintech companies that the Central Bank of Nigeria (CBN) ordered to halt taking on new clients.
These fintech businesses have responded by declaring that transactions using cryptocurrencies or virtual currencies are not permitted on their networks.
Fintech companies operating under CBN supervision are mandated to notify the NSA of any cryptocurrency account trading through the CBN, their regulator.
The Nigerian government’s crackdown on cryptocurrency exchanges and associated transactions coincides with KuCoin’s VAT charge; as a result, Binance left the market.
NGN/USD P2P trading was also stopped on Binance and KuCoin’s platforms as a result of this crackdown.
