Citing naira manipulation concerns, the Economic and Financial Crimes Commission (EFCC), has secured an order from the Federal High Court to freeze N548.6 million in bank accounts belonging to suspected crypto users on platforms like ByBit, KuCoin, and others.
The Nigerian anti-graft agency filed the motion on September 3 (last Tuesday).
It is important to note that this is just two weeks after the Nigeria Securities and Exchange Commission (SEC) announced that seven crypto entities have been granted an ‘Approval-in-Principle.” These include Quidax Technologies Company and Busha Digital Limited.
Related post: SEC grants approval in principle to Quidax, Busha and 5 other Nigerian crypto exchanges
Recall that 2024 has been a year of clampdown on crypto companies and users in Nigeria due to the alleged use of digital currencies for terrorism financing and its role in FX market manipulations.
An executive of the largest crypto exchange globally, Binance, has spent six months in detention for these reasons and the granting of licenses to a few local crypto exchanges by the Securities and Exchange Commission (SEC) has done nothing to stop the clampdown.
Details on the court order
The motion, dated September 3, 2024, indicted crypto exchanges ByBit and KuCoin, accusing them and several unnamed crypto platforms of enabling their Nigerian users to engage in ”price discovery, confirmation, and market manipulation” through their platforms.
It also accused them of causing “distortions in the market, resulting in the naira losing its value against other currencies.”
Nairametrics reported that Okoro Phillip, an EFCC investigator, stated in his affidavit, that the naira attained a semblance of gains and stability in the past few months but has been swiftly eroded.
Now, Okoro stated that further investigation and intelligence indicated that “these fluctuations were primarily driven by activities on platforms such as ByBit, KuCoin, and other similar cryptocurrency platforms.” He disclosed that 22 bank accounts in various Nigerian banks belong to USDT traders on p2p platforms.
In the case marked FHC/ABJ/CS/543/2024, the EFCC official added that the exchange rates determined by users of these cryptocurrencies adversely affect the value of the naira by artificially lowering its value and the proceeds of this manipulation go into the account of the willing seller.
Also, the EFCC alleged that further intelligence has revealed that the proceeds of crimes and funds for terrorist activities are covertly exchanged through these platforms. The prosecution thereby accused Bybit, KuCoin and others of deliberately ignoring the mandatory requirements under Nigeria’s anti-money laundering laws and regulations, enabling users of the platforms to operate in secrecy.
Consequently, the EFCC wrote to all the banks where the P2P traders’ accounts are domiciled, requesting hard copies of the identified account details, a directive which has been complied with. EFCC counsel, Ekele Iheanacho, urged the court to freeze the bank accounts listed in its schedule.
The identified accounts include those of Kora Payment Network, AD Ishola Farms Ltd, and Microcore Tech Investment Services.
The motion was moved in open court by Iheanacho last Wednesday, September 4, 2024, and granted by Justice Emeka Nwite.
Despite the SEC license, crypto usage remains illegal
The Approval-in-principle from the SEC to a handful of local cryptocurrency exchanges was supposed to provide some respite for crypto usage in the country, but it now seems the inverse is the case.
Recall that in December 2023, the Central Bank of Nigeria lifted the restrictions on crypto transactions within the country’s financial system after almost three years. However, in May 2024, the institution started directing banks to block accounts of crypto traders.
Apart from the fact that a Binance executive has now spent over six months in detention on claims that the platform allowed for manipulation of the naira through its p2p platform, the CBN compelled fintechs to block any account believed to be trading crypto.
According to a publication last week, a bank executive stressed that cryptocurrency is still persona non grata and the CBN has not openly accepted it yet. Also, the same report said banks are ignoring the licences granted to Quidax and Busha by the SEC.
This polarity in regulation has left cryptocurrency ownership and usage in Nigeria in a state of uncertainty. Crypto enthusiasts can only hope clearer instructions from the CBN provide the clarity needed at this critical time.
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