Nigerian Central Bank Accuses Binance of Illegally Operating Fiat Currency Exchange and P2P Banking Activities
According to Nigerian media outlet Premium Times, the country’s Central Bank (CBN) has accused cryptocurrency exchange Binance of conducting banking and financial institution activities without permission and regulatory approval, including fiat currency exchange and P2P market services.
Binance’s Alleged Illegal Operation of Banking Business
According to the report, Olubukola Akinwunmi, the Deputy Governor of the Central Bank of Nigeria (CBN), testified in court last Friday, claiming that Binance’s deposit and withdrawal transactions and other financial services should only be provided by banks and authorized financial institutions.
Unauthorized Currency Exchange
Firstly, the Economic and Financial Crimes Commission (EFCC) and Ekele Iheanacho, the Director of Payments and Regulatory Policy at the CBN, stated that no license had been issued to Binance to operate in the country. They usually monitor the activities of local payment providers, and at this time, they noticed that Binance provided a platform for users to trade virtual assets.
He claimed that many local people used the payment system for transfers, payments, and currency exchange between the local currency, the Naira (NGN), and the US dollar. However, these traders usually used false identities, and Binance also did not have authorization from the CBN to conduct this business. He added, “Only the CBN and authorized traders are allowed to provide fiat currency exchange services, and the transactions themselves violate laws requiring the disclosure of true identities in financial transactions.”
In response, Binance announced in February this year that it would withdraw its fiat currency exchange services in the country amid regulatory controversies.
P2P Market
Additionally, Akinwunmi mentioned Binance’s P2P market, emphasizing that the company had no authority to conduct related business. Buyers transfer Naira to sellers’ bank accounts and confirm transactions on the platform, enabling them to directly trade fiat currencies or cryptocurrencies through bilateral negotiations.
Similarly, Binance had already shut down its P2P trading function for local users earlier this year.
The court will adjourn until July 16 for further cross-examination.
Nigeria’s Crackdown on Cryptocurrencies
Previously, Nigerian authorities accused Binance of manipulating exchange rates, unpaid taxes, and involvement in money laundering, seeking billions of dollars in compensation and detaining two of its executives.
As part of a major regulatory move against the cryptocurrency industry, the country’s authorities have also demanded that local banks and fintech companies, including OPay, Kuda Bank, and PalmPay, cease interacting with cryptocurrency-related businesses, or else face sanctions.
The largest commercial payment platform in Nigeria, Moniepoint, also notified its users in May this year, urging them not to use accounts that have been used for cryptocurrency transactions in its app to avoid trouble. According to CBN regulations, we will close any accounts engaged in cryptocurrency transactions and share their details with the authorities.
Facing Nigeria’s strict regulatory attitude, the International Monetary Fund (IMF) previously advised the country to implement anti-money laundering mechanisms for the cryptocurrency industry and further open up development, which would help support local economic growth.
