In a move that could have far-reaching implications for the cryptocurrency industry in Nigeria, a Federal High Court in Abuja has ordered Binance Holdings Limited, the world’s largest crypto exchange, to provide comprehensive data and information on all Nigerian users trading on its platform to the Economic and Financial Crimes Commission (EFCC).
The directive came in the form of an interim ruling delivered by Justice Emeka Nwite on February 29, 2024, following an ex-parte motion filed by the EFCC against the cryptocurrency exchange giant. The anti-graft agency’s legal team, spearheaded by Ekele Iheanacho, presented arguments alleging potential criminal activities associated with Binance’s operations in Nigeria, contravening Sections 38 of the EFCC Act, 2004, and Section 15 of the Money Laundering (Prevention and Prohibition) Act, 2022 (as amended).
At the heart of the EFCC’s case lies an affidavit deposed by one of its operatives, Hamma Bello, which outlines the agency’s ongoing investigation into alleged nefarious activities, including money laundering and terrorism financing, facilitated through the Binance platform. According to Bello, the EFCC received intelligence about these activities and initiated an investigation, conducting surveillance on the platform’s operations.
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The affidavit further reveals that the EFCC uncovered users allegedly engaging in price discovery, confirmation, and market manipulation, which purportedly caused significant distortions in the market, resulting in the Nigerian Naira losing value against other currencies. Bello stated that the EFCC had previously requested Binance to delist the Naira and provide information on Nigerian users’ activities, but the exchange’s response indicated that the total trading volume from Nigeria in 2023 alone stood at a staggering $21.6 billion.
In his ruling, Justice Emeka Nwite approved the EFCC’s request, ordering Binance to provide the Commission with comprehensive data and information relating to all Nigerian users trading on its platform. This decision could have far-reaching consequences for the cryptocurrency landscape in Nigeria, as it potentially sets a precedent for increased scrutiny and regulation of digital asset platforms operating in the country.
The move by the Nigerian authorities comes amidst growing concerns over the potential misuse of cryptocurrencies for illicit activities, such as money laundering and terrorism financing. While the use of digital assets has gained popularity in Nigeria, with the country ranking among the top adopters globally, regulatory bodies have expressed apprehensions about the lack of oversight and the potential risks associated with unregulated crypto trading.
As Binance grapples with the court order, industry observers and stakeholders alike will be closely watching the exchange’s response and the potential implications for the broader cryptocurrency ecosystem in Nigeria. The development could spur further regulatory action and heightened scrutiny, potentially shaping the future of digital asset trading and adoption in the country.
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