TLDR
The Central Bank of Nigeria (CBN) alleges that Binance performed unauthorized banking services and currency conversions in Nigeria.
A CBN official testified that Binance facilitated peer-to-peer transactions involving the Nigerian naira without proper licenses.
Binance and its executives are accused of conspiring to obscure the origins of $35.4 million in alleged illegal financial proceeds.
Tigran Gambaryan, a Binance executive, remains in detention in Nigeria, with conflicting reports about his health condition.
Nigerian authorities claim Gambaryan is “fine,” while his family says he is “suffering immensely” in detention.
Cryptocurrency exchange Binance is facing significant legal challenges in Nigeria, as the country’s central bank alleges unauthorized banking services and currency conversions. The ongoing case has shed light on the complex relationship between cryptocurrency platforms and traditional financial regulations in emerging markets.
In a testimony before the Federal High Court of Nigeria in Abuja, Olubukola Akinwunmi, head of payment policy and regulation at the Central Bank of Nigeria (CBN), accused Binance of performing banking services without proper authorization. Akinwunmi stated that Binance’s deposit and withdrawal transactions should be reserved for banks and authorized financial institutions only.
The Nigerian government has accused Binance and its executives, Tigran Gambaryan and Nadeem Anjarwalla, of conspiring to obscure the origins of $35.4 million in alleged illegal financial proceeds.
The case, brought by the Economic and Financial Crimes Commission (EFCC), highlights the growing scrutiny of cryptocurrency operations in Nigeria.
According to Akinwunmi’s testimony, Binance’s website misled Nigerians into using its platform for naira transactions via a cash link.
The platform promoted fee-free deposits and flat-fee withdrawals, activities that are regulated by the CBN and typically reserved for licensed banks and financial institutions. Akinwunmi also claimed that Binance facilitated currency conversion from naira to US dollars without the necessary CBN authorization.
A key point of contention is Binance’s peer-to-peer (P2P) transaction process. Akinwunmi detailed how users could transfer naira to each other’s bank accounts and confirm the transaction on the platform, prompting Binance to release cryptocurrency or fiat currency. He argued that this service is a regulated activity that Binance was not authorized to perform.
The case has taken on additional complexity due to the detention of Binance executive Tigran Gambaryan.
Arrested on February 28 alongside Binance’s regional head for Africa, Nadeem Anjarwalla, Gambaryan remains in custody while Anjarwalla has since fled the country. The detention has raised concerns about Gambaryan’s health and treatment.
Gambaryan’s family has stated that he is “suffering immensely” in detention, citing health issues including numbness in his foot, back pain, double pneumonia, and malaria.
However, Nigerian prison officials have countered these claims, stating that Gambaryan has no “serious health condition” and is doing “fine” in detention.
The conflicting reports about Gambaryan’s health have become a focal point in the ongoing legal battle. His lawyers informed the court that despite several court orders, officials at the Kuje prison in Abuja have yet to release his medical records from a hospital visit on June 3.
The case against Binance is part of a broader crackdown on cryptocurrency activities in Nigeria. The country’s National Security Adviser recently classified cryptocurrency trading as a national security issue, leading to directives for fintech startups to block and report accounts engaging in cryptocurrency transactions.
In response to government scrutiny, Binance disabled its peer-to-peer feature for Nigerian users in February. The Nigerian Securities and Exchange Commission has called for measures to delist the naira from P2P platforms to curb market manipulation and protect the integrity of Nigeria’s capital market.
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