A Central Bank of Nigeria (CBN) official has testified that Nigerian users of cryptocurrency exchange Binance conduct transactions using fictitious names, potentially complicating the ongoing legal battle between the cryptocurrency exchange and Nigerian authorities.
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Driving the news
- According to a News Agency of Nigeria report, Olubukola Akinwumi, deputy director at the CBN, testified before Justice Emeka Nwite of the Federal High Court in Abuja on Friday, July 5.
- Akinwumi explained that Binance users in Nigeria often use pseudonyms to hide their identities when trading on the platform.
- The testimony is part of the ongoing trial against Binance and its executive, Tigran Gambaryan, who face money laundering charges involving $35.4 million.
Akinwumi, who heads the Payment Policy and Regulation Division in the CBN’s Payments System Management Department, stated:
“We observed in doing that […] Binance provides a trading platform where users trade virtual assets. And to consummate their transactions for the purpose of settlement of payments, the users make use of the payment system for the purpose of transferring or making payments to one another. These traders normally trade in pseudo-names (pseudonyms) that hide their identities and they are not authorized by the CBN.”
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- The CBN official said services related to the withdrawal and deposit of naira “is a regulated activity carried out by banks and other financial institutions duly registered by CBN,” adding that Binance does not have a license to operate in Nigeria.
- Akinwumi described how Binance’s peer-to-peer (P2P) platform facilitates transactions between users, allowing them to trade virtual assets and fiat currency.
- He explained that users can deposit and withdraw Nigerian Naira (NGN) on the platform, an activity typically regulated by the CBN.
💭 Oluwaseun’s views
The ongoing legal action against Binance would one day be an MBA case study on how not to regulate a new market.
“The future demands that as regulators we should be both proactive and adaptive, continuously evolving our approaches to keep pace with technological advancements. This will involve embracing new regulatory frameworks, leveraging advanced technologies for oversight, and maintaining a flexible mindset to accommodate the rapid changes in the sector.”
- Indeed, the regulator is demonstrating congruence between rhetoric and action. South Africa is the only large African economy with a working crypto regulation regime.
- The FSCA recently granted 63 additional licenses to crypto firms, bringing the total number of licenses to 138.
- It also announced that it’s currently investigating 30 crypto cases. However, these investigations only started after it laid down clear rules.
- In his lecture, Kamlana highlighted how a working regulation is attracting investments to South Africa.
There’s a uniform theme from the conversations I’ve had with stakeholders in the space: Nigeria’s heavy-handed approach is eroding trust in Nigeria’s crypto market.
- Some of the most gifted builders I know have shifted their focus away from Nigeria. There’s a growing theme of “build for the world” among them.
- One builder told me:
“Everything I do now is more global and focused on the emerging on-chain economy. No longer Nigeria/Africa focused. I think more operators and builders in the space should do the same.”
- The unpredictability of Nigeria’s regulatory environment will continue to push crypto innovations and investments to more stable markets.
- Ultimately, Nigeria is poised to be the bigger loser.
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Mariblock has published a Nigeria vs. Binance timeline of events report related to this story. You can get the complete backstory there.
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