Nigeria's Economic and Financial Crimes Commission (EFCC) has recently obtained an order from the Federal High Court to freeze the bank accounts of multiple crypto users, involving up to 548.6 million naira (approximately US$330,000). The overseas exchanges used by these users include ByBit and KuCoin. They were accused of contributing to the devaluation of the naira, Nigeria's legal currency, prompting an investigation.
Nigeria has also previously accused Binance of devaluing its legal currency and even arrested its top executives , who have not yet been released.
Recent actions show the Nigerian government’s stance on the regulation of the foreign exchange market and cryptocurrency, trying to prevent economic instability through legal means to ensure tax compliance.
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ToggleOverseas exchanges suspected of manipulating Nigeria’s legal currency exchange rate
Looking back in February 2024, Nigeria's national security department arrested two senior executives of the cryptocurrency exchange Binance on suspicion of money laundering, tax evasion and execution of terrorist financing operations.
Recently, the Nigerian court further expanded the scope of the accusation to ByBit and KuCoin, and accused these overseas exchanges and other unnamed cryptocurrency platforms of allowing Nigerian users to conduct "price discovery, confirmation and market manipulation" through the platform, resulting in market imbalance. Devaluing the Nigerian currency.
Nigeria's Economic and Financial Crimes Commission EFCC pointed out in a report that in recent months, the Nigerian government has controlled currency exchange, and the exchange rate of the U.S. dollar on the black market has been maintained at 1:980 (U.S. dollar to naira). However, on April 18, 2024, the U.S. dollar-naira exchange rate suddenly surged to 1,250 naira, and after investigation, the EFCC found that the fluctuation was mainly caused by cryptocurrency exchanges such as ByBit and KuCoin.
Money laundering users were investigated and their accounts were actually located in Nigeria
The EFCC revealed that the 22 bank accounts involved in the case were distributed in multiple banks in Nigeria. The account holders were mainly USDT sellers. They traded on these exchanges to exchange naira for USDT and vice versa.
Prosecutors allege that the cryptocurrency exchanges ignored Nigeria's anti-money laundering laws, allowing exchange users to operate without permission and conduct transactions detrimental to Nigeria's financial market.
The EFCC added that the cryptocurrency exchange ByBit mainly exchanges USDT with other currencies (including Naira). Users can set their own exchange rates, causing the value of the Naira currency to be artificially depressed.
EFCC issues deposit letter calling on court to freeze bank accounts
The EFCC further alleged that these exchanges were becoming conduits for obtaining illegal funds. It also stated that it has issued deposit certificate letters to all banks with relevant accounts and included them in the list, and requested the personal information of these accounts. It also emphasized that these banks have cooperated with the investigation and investigation.
The EFCC’s legal counsel called on the Nigerian court to freeze bank accounts on the list of individuals or companies involved in unauthorized foreign exchange transactions, money laundering and illegal financing activities, some of which have been investigated and prosecuted. The freezing measures will last until the investigation process is completed.
The accounts identified include Kora Payment Network , AD Ishola Farms Ltd and Microcore Tech Investment Services .
Cryptocurrency trading is included in national security issues, and no company at home or abroad is spared
Recently, Nigeria’s national security adviser included cryptocurrency trading as a national security issue, which led to Nigeria’s central bank, the CBN, ordering five financial technology companies including OPay , Palmpay , Moniepoint , Kuda and Paga to stop adding new users.
These financial technology companies subsequently announced that they would ban any digital or cryptocurrency transactions on their platforms. Under CBN regulatory requirements, these companies must report any accounts involved in cryptocurrency transactions to the national security adviser.
KuCoin is currently facing VAT issues at a time when the Nigerian government is increasing its crackdown on cryptocurrency exchanges and related transactions, which has also caused Binance to withdraw from the market. Additionally, the action forced Binance and KuCoin to halt the Naira (NGN)/US Dollar (USD) P2P trading pair on the exchanges.
Future regulatory directions to combat unauthorized financial transactions
Nigeria’s future regulatory direction will focus on combating unauthorized foreign exchange trading, strengthening the enforcement of anti-money laundering regulations, and improving the transparency and compliance of crypto trading platforms. At the same time, we will continue to use legal means to prevent illegal activities from damaging the country's financial stability and ensure that financial technology companies and related platforms comply with domestic and foreign regulatory requirements during the transaction process. This regulatory trend shows that Nigeria will seek a balance between promoting digital financial innovation and maintaining economic security.
