Central Bank of Nigeria (CBN Alleges Binance of Unauthorized Banking Services and Currency Conversion Activities)

The Central Bank of Nigeria (CBN) has made serious allegations against popular crypto exchange Binance, claiming that the platform has been performing banking services without proper authorization. The accusations were brought to light during a trial in the Federal High Court of Nigeria, where CBN representative Olubukola Akinwunmi testified against Binance and its executives.

According to Akinwunmi, Binance has been accused of facilitating unlicensed currency conversion and obscuring the origins of millions of dollars in financial proceeds from illegal activities in Nigeria. The platform allegedly misled users into conducting naira transactions through a cash link, offering fee-free deposits and flat-fee withdrawals that are regulated activities reserved for licensed banks and financial institutions.

Furthermore, Binance is said to have facilitated currency conversion from naira to US dollars without proper authorization from the CBN, as well as allowing traders to use pseudonyms, which goes against laws requiring the disclosure of true identities in financial transactions. The platform’s peer-to-peer transaction process was also highlighted as a regulated activity that Binance was not authorized to perform.

Following Akinwunmi’s testimony, the court adjourned until July 16 for the defense’s cross-examination, with Judge Emeka Nwite ordering the Nigerian Correctional Services to produce medical reports for one of Binance’s executives. This crackdown on cryptocurrency activities comes after the Nigerian government classified cryptocurrency trading as a national security issue, leading to directives for fintech startups to block and report accounts engaging in such transactions.

In response to government scrutiny, Binance disabled its peer-to-peer feature for Nigerian users in February. The Securities and Exchange Commission (SEC) also called for measures to delist the naira from P2P platforms to prevent market manipulation and protect the integrity of Nigeria’s capital market. Despite these setbacks, Nigeria’s crypto reputation is expected to prevail, according to exchange executives.