Anti-graft agency gets court order to track Nigerians on Binance

The agency says it has evidence to believe that some Nigerians used Binance for illegal activities and manipulation of the foreign exchange market.

Anti-graft agency gets court order to track Nigerians on Binance

The Nigerian Economic and Financial Crimes Commission (EFCC) has secured a court order mandating the cryptocurrency exchange Binance share information on Nigerians who have transacted on its platform. The agency claimed it received intelligence that Binance's Nigerian users were perpetrating money laundering and terrorism financing acts.

The details 

  • Nigerian publication The Punch, a Federal High Court (FHC) in the country’s capital city, Abuja, ruled in favor of the EFCC’s motion filed on Feb. 29. 
  • An operative of the EFCC, Hamma Bello, said the joint committee set up by the Office of the National Security Adviser (ONSA) to investigate Binance found that Nigerians used the platform to manipulate market prices and cause the naira’s fall. 
  • This was confirmed by a report of an internal analysis conducted by the country’s apex bank on the trading activity on Binance’s peer-to-peer platform between February 19 and 21. 
  • Citing unnamed sources close to the matter, TechCabal reported that several Nigerian retail USDT traders made large “Buy” orders for USDT without following up on the purchase. 
  • This created an artificial demand for the United States dollar-pegged stablecoin and caused the naira to drop rapidly, falling to 1950naira/$ from 1500naira/$. 
  • Nigerian investigators believe these retail traders manipulated prices to benefit from the resulting arbitrage opportunity. As such, the request for Binance to disclose the information of its Nigerian users may be to identify individuals it felt participated in market manipulation. 

 

Key quote 

  • In a sworn statement presented before Justice Nwite of the FHC Abuja, Bello wrote: 

“The Special Investigation Team of the commission domiciled in the Office of the National Security Adviser received an intelligence stating the nefarious activities (money laundering and terrorism financing) on Binance, a cryptocurrency exchange platform.” 

  • He added: 

“The team uncovered users who have been using the platform for price discovery, confirmation, and market manipulation, which has caused tremendous distortions in the market, resulting in the Naira losing its value against other currencies.”

Catch up 

  • Earlier in the year, Nigerian authorities launched an inter-agency probe into the trading activities carried out on Binance, believing that the crypto platform had allowed itself to be used to manipulate foreign exchange rates. 
  • In response to an invitation by the Nigerian government, two Binance executives, Tigran Gambaryan, head of financial crime compliance, and Nadeem Anjarwalla, Binance Africa’s head of compliance, flew into the country. 
  • Nigerian officials have since detained them and have been ‘cooperating’ with authorities, according to a spokesperson for the Nigerian government. 
  • Binance has since delisted the NGN trade pairs. It also released a statement saying it would no longer support naira (NGN) services on its platform.