A director in the Security and Exchange Commission (SEC), Abdulkadir Abbas, yesterday told a Federal High Court in Abuja that the operations of Binance Holdings Limited in Nigeria were illegal and circumvented the normal currency trading route put in place by regulators.
Abbas, Director Registration, Exchanges and Market Infrastructure Department at SEC, spoke while testifying as the first prosecution witness in the trial of Binance and two of its officials on a charge bordering on money laundering.
Binance, Tigran Gambaryan Nadeem Anjarwalla, the firm’s Regional Manager for Africa (who escaped from lawful custody) are being prosecuted by the Economic and Financial Crimes Commission (EFCC).
Led in evidence by prosecuting lawyer, Ekele Iheanacho, Abbas said he met Gambaryan once during a meeting at the office of the National Security Adviser (NSA).
Abbas said Binance and its officials were invited by the NSA to the meeting to discuss its operations and the impact on the Nigerian economy.
The witness added: “At the meeting, it was clearly observed that the first defendant’s (Binance’s) mode of operation is against the provision of the Investment and Securities Act 2007
“Apart from not being registered in Nigeria and making public solicitation without authorisation, the first defendant operates a naira peer to peer (P2P) in exchange for crypto assets.
“The naira P2P being deployed in the transaction, circumvents the normal trading route.
“This is because the Central Bank of Nigeria (CBN) has banned banks from providing a certain settlement platform for crypto exchange.
“As a result of the naira P2P deployed by Binance, and coupled with the large number of Nigerian users who were leveraging on that model, it adversely affected the official exchange rate.
“As a matter of fact, the Binance platform became a reference point for determining the exchange rate.
“The naira P2P model created uncertainty and high level of volatility in the exchange rate as Nigerian users trade arbitrarily on the platform, thereby impacting negatively on financial system stability.
“The naira P2P rate quoted on Binance’s platform is not referencing any official rate, and its continuous operation affects the value of our naira.
“This was one of the serious concerns raised at the meeting we had at the office of the NSA.”
