Nigeria's Central Bank accuses Binance of illegally operating banking activities such as fiat currency exchange and P2P markets.

According to Premium Times report, the Central Bank of Nigeria (CBN) has accused the exchange Binance of conducting banking and financial services without permission and regulatory approval, including fiat currency exchange and P2P market services.

Binance Accused of Illegal Banking Operations

Reports indicate that 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, along with other financial services, should only be provided by banks and authorized financial institutions.

Unlicensed Currency Exchange

Firstly, the Head of Payment and Regulatory Policies at the Economic and Financial Crimes Commission (EFCC) and CBN, Ekele Iheanacho, stated that there was no license issued to Binance to operate in the country:

We usually monitor the activities of local payment providers and noticed that Binance provided a platform for users to trade virtual assets.

He claimed that many local residents use the payment system for transfers, payments, and converting the local currency, Naira (NGN), into US dollars:

However, these traders often use false identities for transactions, and Binance is not authorized by the CBN to conduct such business.

He added, "Only the CBN and authorized dealers are allowed to provide currency exchange services, and the transactions themselves violate the law that requires disclosure of real identities in financial transactions."

In response, when faced with regulatory controversies in February of this year, Binance promptly announced the discontinuation of fiat currency exchange services in the country.

P2P Market

In addition, Akinwunmi mentioned Binance's P2P market, emphasizing that the company is not authorized to conduct such business:

Buyers transfer Naira to the seller's bank account and confirm the transaction on the platform, enabling the two parties to directly trade various fiat currencies or cryptocurrencies through negotiation.

Similarly, Binance had earlier shut down its P2P trading feature for local users.

The court will adjourn until July 16 for further cross-examination.

Nigeria Takes Major Action to Block Cryptocurrencies

Previously, Nigerian authorities accused Binance of manipulating exchange rates, owing taxes, and involvement in money laundering, seeking billions of dollars in restitution and detaining two senior executives.

Nigeria Plans to Ban Cryptocurrency Exchanges: Severe Manipulation of Local Fiat Exchange Rates, Naira Plummets 28% in a Day

As part of a major regulatory crackdown on the crypto industry, the country's authorities have also instructed several local banks and fintech companies, including OPay, Kuda Bank, and PalmPay, to cease interactions with cryptocurrency-related businesses or face sanctions.

The largest commercial payment platform in the country, Moniepoint, also advised its users in May not to use accounts that have engaged in cryptocurrency transactions on its app to avoid trouble:

According to CBN regulations, we will close accounts engaged in cryptocurrency transactions and share their details with the authorities.

Facing Nigeria's strict regulatory stance, the International Monetary Fund (IMF) had previously recommended the country to implement anti-money laundering mechanisms in the crypto industry and further open up development to help boost the local economy amidst current economic risks.

IMF Suggests Nigerian Authorities Regulate Cryptocurrency Exchanges and Implement Anti-Money Laundering Measures, Rather Than Strictly Banning Them