Nigeria anti-graft agency, the Economic and Financial Crimes Commission (EFCC), has obtained a Federal High Court order to freeze N548.6 million (about $332,000) in bank accounts linked to suspected crypto platforms. The accounts, connected to platforms such as ByBit and KuCoin, are under investigation for allegedly contributing to fluctuations in the naira’s value.
The court order, dated September 3, 2024, accuses ByBit and KuCoin of engaging in “market manipulation and price distortions” that devalued the naira. According to the EFCC, these platforms facilitated unauthorized foreign exchange transactions, leading to economic instability.
This move is part of a broader crackdown on foreign cryptocurrency platforms suspected of foreign exchange violations and tax evasion. Earlier this year, Nigerian authorities arrested two executives from Binance, including its former compliance head, Tigran Gambaryan, in connection with alleged money laundering offenses totaling $35.4 million. Following these arrests, the EFCC expanded its investigation to include ByBit, KuCoin, and other crypto platforms.
Crypto’s impact on the Naira
An affidavit by EFCC investigator Okoro Philip outlined the extent of the naira’s volatility. For instance, as of April 2024, the naira was trading at N980 to $1 on the black market. However, within weeks, it had plummeted to N1,250 to $1. Philip attributed this sharp fluctuation to unauthorized foreign exchange dealings on cryptocurrency platforms, which allegedly allowed users to manipulate market rates.
The EFCC further claimed that 22 bank accounts, linked to these platforms, were used to exchange naira for USDT, a stablecoin pegged to the US dollar. These activities, according to the commission, significantly contributed to the naira’s devaluation.
The EFCC alleges that the account holders and platform users conducted illegal foreign exchange transactions without proper authorization. Additionally, ByBit and KuCoin have been accused of ignoring Nigeria’s anti-money laundering laws, enabling users to carry out illegal financial practices.
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The proceeds from these transactions reportedly went into the accounts of willing sellers involved in the illegal exchanges.
Moreover, the EFCC suspects that some of the frozen accounts may be linked to proceeds from criminal activities, including terrorism financing. EFCC counsel Ekele Iheanacho urged the court to freeze the accounts asr investigations continue. Justice Emeka Nwite granted the EFCC’s request.
Implications of the crackdown
The crackdown on cryptocurrency platforms like ByBit and KuCoin has sent ripples through Nigeria’s crypto market. Binance, which has been under increasing regulatory pressure, recently delisted its peer-to-peer trading section for Nigerian users in response to government scrutiny.
The Nigerian government has recently tightened its stance on cryptocurrency. The National Security Adviser recently classified crypto trading as a national security threat.
In line with this, the Central Bank of Nigeria (CBN) ordered fintech companies like OPay and Kuda to stop onboarding new customers for cryptocurrency transactions. These companies are now required to report accounts engaged in cryptocurrency trading to the NSA via the CBN.
These actions have put pressure on cryptocurrency platforms with Binance recently delisting its peer-to-peer trading section for Nigerian users in response to government scrutiny.
