Binance Ordered By Nigerian Court To Provide Full User Data Disclosure

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A Nigerian High Court has mandated Binance Holdings to provide the Economic and Financial Crimes Commission (EFCC) with comprehensive data concerning Nigerian users engaged in trading on its platform.

An online news platform, Sahara Reporters says Justice Emeka Nwite delivered the court’s decision on February 29, prompted by an ex parte motion from the EFCC. The anti-graft agency expressed concerns about potential illicit activities linked to cryptocurrency trading.

Allegations Against Binance

Lawyer Ekele Iheanacho, representing the EFCC, filed an ex parte motion alleging that Binance’s activities in Nigeria show signs of criminal behavior, citing provisions in the EFCC Act of 2004 and the Money Laundering (Prevention and Prohibition) Act of 2022 requiring the reporting of suspicious transactions, with the opposing party absent during the filing.

In a court affidavit, EFCC operative Hamma Bello stressed the urgency of the Commission’s investigation prompted by intelligence, which indicated money laundering and terrorism financing through the Binance platform. Bello pointed out various illicit activities, such as price manipulation and market distortions, exacerbating the depreciation of the Nigerian naira in comparison to other currencies, among others.

Authority’s Dialogue with Binance

The EFCC asserts that it previously communicated the adverse economic impact of these activities to Binance, prompting a request to remove the naira from its trading platform. However, Binance’s response to these concerns remains undisclosed.

The EFCC claims it had previously informed Binance about the negative economic consequences of these activities, leading to a request for the removal of the naira from its trading platform. Nevertheless, Binance’s reply to these concerns remains undisclosed except for dropping the Nigerian Naira from its peer-to-peer (P2P) trading platform.

In addition to the EFCC, the Central Bank of Nigeria heightened its examination of Binance due to worries about “suspicious transactions,” with a massive $26 billion passing through the exchange platform in Nigeria in 2023 from unidentified sources and users.

Implications for Nigeria’s Crypto Market

In response to the court order, Nathaniel Luz, CEO of Flincap, emphasized the importance of dialogue between Binance and the Nigerian government to address the underlying issues. Conversely, presidential adviser Bayo Onanuga suggested the possibility of banning platforms like Binance in Nigeria, attributing them to the manipulation of the naira and subsequent economic decline.

Following the court order, Nathaniel Luz, CEO of Flincap, stressed it was necessary to foster dialogue between Binance and the Nigerian government to tackle the root issues. In contrast, presidential adviser Bayo Onanuga maintained that platforms such as Binance should be banned in Nigeria, citing their potential role in manipulating the naira and precipitating economic downturn.

Nigeria, a country of over 200 million people with over sixty percent being youths, is a rapidly expanding crypto market on the global stage and has experienced substantial uptake of cryptocurrencies in recent times, establishing itself as the second-largest economy in crypto adoption in 2023. Analysts believe excluding such a large market from the crypto trade will have a serious impact on the financial sector.

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