Nigeria's EFCC Amends Lawsuit Against Binance, Accusing the Exchange of Laundering Over $35 Million

Nigeria's financial crimes watchdog has amended its lawsuit against Binance and one of its executives, accusing the exchange of laundering over $35 million.

Nigeria’s financial crimes watchdog has amended its lawsuit against Binance and one of its executives, accusing the exchange of laundering over $35 million.

The Economic and Financial Crimes Commission (EFCC) submitted the amended lawsuit to Justice Emeka Nwite of the Federal High Court in Abuja this week, local outlets report. It alleges that Binance and its fugitive regional manager, Nadeem Anjarwalla, concealed $35.4 million generated by the exchange from its Nigerian operations despite knowing that the money was the proceeds of unlawful activity.

The EFCC’s legal battle against Binance started early this year when the agency accused the exchange and two of its executives of money laundering and tax evasion. Anjarwalla escaped from detention in Abuja and has been at large ever since. His colleague, Tigran Gambaryan, who heads Binance’s financial crime compliance department, was detained for eight months. He was released a month ago, with his poor health and diplomatic demands from the U.S. government playing a big role.

In its amended lawsuit, the EFCC alleges that Binance offered financial services without a valid license (which has become somewhat of a Binance playbook globally). It also negotiated foreign exchange rates in the country without authorization, an accusation that the country’s Bureau de Change operators had thrown at the exchange a year ago.

Local outlets report that since Binance wasn’t represented in the hearing this week, a not-guilty plea was automatically entered to enable the court to proceed with the trial.

Nigeria’s revitalized digital currency crackdown

The revamped pursuit of Binance comes as the EFCC convicted half a dozen local digital asset firms of illegal foreign exchange operations. The most recent is Plip Global, which pleaded guilty to converting U.S. dollars to naira through USD-backed stablecoins without a valid license. Plip also allegedly failed to report to the EFCC a N100 million ($59,000) transfer into its account, violating ALM laws. A federal judge in Abuja ordered the company to forfeit $14,750 and pay a $300 fine.

Three weeks ago, the EFCC secured convictions against two other ‘crypto’ firms—Chimera Log and Egomsinachi—for similar crimes and ordered the forfeiture of $29,500 held in their accounts.

The EFCC’s fresh crackdown aligns with Nigeria’s approach this year, where it has tightened its oversight over the digital asset sector. The West African nation has purged offshore exchanges like Coinbase (NASDAQ: COIN), KuCoin and licensed local exchanges to better protect investors. Busha Digital and Quidax were the first two local platforms to receive the license.

Still, the country has a long way to go in stamping out digital currency-related crimes. A recent report by identity solutions firm Sumsub found that Nigeria has the highest number of cases of identity fraud, which has spread to the digital assets sector.

“The growing use of cryptocurrency in Nigeria has provided fraudsters with new opportunities for fraud,” commented Hannes Bezuidenhout, Sumsub’s VP for Africa.

“Fraudsters have taken advantage of this [adoption], launching cryptocurrency scam schemes, fake investment platforms, and fraudulent Initial Coin Offerings. The relative anonymity of cryptocurrency transactions makes it harder for authorities to trace fraudulent activities,” he added.

While financial industry leaders acknowledge the need to protect investors, Nigeria’s approach has divided opinions. Some, like Obinna Iwuno, say that licensing exchanges and implementing regulations is the best way forward. This approach balances investor protection and promoting innovation.

Others, however, believe that digital currency poses heightened risks to Nigerians and that the government should clamp down harder. Speaking to the media after a recent industry event, local finance expert Kingsley Aguoru urged the government to push eNaira as a better alternative to decentralized digital currencies.

“Cryptocurrencies, while innovative, exhibit high volatility and unpredictable value swings,” he stated, adding that they fail to exhibit the three functions of money: store of value, medium of exchange, and unit of account. 

“In order for a currency to fulfill these functions, it must have a stable value, consistent pricing metrics, and facilitate efficient transactions. Cryptocurrencies struggle to meet these standards,” he said.

South Africa issues license to pan-African exchange Yellow Card

The pan-African exchange Yellow Card has become the latest in South Africa to obtain a Crypto Asset Service Provider (CASP) license under the country’s Bitcoin-friendly regulatory regime.

The exchange started its South African operations under a local subsidiary in 2020 under the old regulatory framework. Since then, it has expanded operations to capitalize on the country’s ever-rising adoption. 

“Yellow Card South Africa is now an authorised financial services provider (FSP) in South Africa. The scope of the authorisation encompasses crypto assets, but it can be easily expanded to include various other financial assets, including stocks and tokenised securities,” the exchange said in a statement to media outlets.