REGULATION | Central Bank of Nigeria Maintains Binance Carried Out ‘Hidden Operations’ Without Authorization

The Central Bank of Nigeria (CBN) has brought its compelling testimony to a close in the ongoing criminal trial against cryptocurrency behemoth Binance, firmly asserting that the platform engaged in "hidden operations" within Nigeria’s financial ecosystem without the requisite authorization. This pivotal development marks a significant turn in a legal battle that has drawn global attention, highlighting Nigeria’s determined stance on regulating digital assets and combating financial illicit activities.

Dr. Olubukola Akinwunmi, the Director of Banking Supervision at the CBN, presented the central bank’s case before Justice Emeka Nwite of the Federal High Court in Abuja. His testimony, concluding a critical phase of the criminal trial initiated by the Economic and Financial Crimes Commission (EFCC) in 2024, laid bare the CBN’s concerns regarding Binance’s operational modalities in Africa’s largest economy. The EFCC has accused Binance, along with two of its former executives, Tigran Gambaryan and Nadeem Anjarwalla, of a sophisticated conspiracy to conceal the origins of approximately $35.4 million derived from alleged unlawful activities within Nigeria. These grave accusations are rooted in purported contraventions of the stringent provisions outlined in the Money Laundering (Prevention and Prohibition) Act, 2022. Binance has vehemently denied all allegations, setting the stage for a protracted legal confrontation.

The Genesis of a Regulatory Battle: Nigeria’s Evolving Crypto Stance

Nigeria’s relationship with cryptocurrencies has been complex and often contradictory, reflecting a global struggle to balance innovation with financial stability and national security. For years, Nigeria has been a global leader in cryptocurrency adoption, driven by a young, tech-savvy population seeking alternatives to a volatile local currency and limited investment opportunities. Data from Chainalysis consistently placed Nigeria among the top countries for crypto adoption, with significant peer-to-peer (P2P) trading volumes facilitating remittances and hedging against inflation. This organic growth, however, occurred largely in a regulatory grey area, leading to increasing concerns from the nation’s financial watchdogs.

The CBN, primarily mandated with maintaining price stability and safeguarding the integrity of the financial system, has long viewed cryptocurrencies with suspicion. Early warnings against digital assets emerged as far back as 2017, citing risks of money laundering, terrorism financing, and consumer protection. This culminated in a landmark directive in February 2021, which explicitly prohibited all regulated financial institutions from facilitating cryptocurrency transactions or dealing with crypto entities. This directive effectively severed traditional banking access for crypto platforms and users, pushing much of the trading activity onto P2P networks, where transactions could be conducted directly between individuals, often bypassing formal financial channels.

The current legal offensive against Binance, therefore, is not an isolated incident but a culmination of these long-standing regulatory anxieties, amplified by pressing economic challenges. Nigeria has grappled with persistent foreign exchange scarcity and a depreciating Naira, issues that authorities believe are exacerbated by unregulated crypto activities. The government suspects that crypto platforms have been used for speculative currency manipulation, contributing to the Naira’s woes and undermining official efforts to stabilize the economy.

CBN’s Core Allegations: Hidden Operations and Pseudonymous Transactions

During the rigorous cross-examination by Binance’s legal counsel, Dr. Akinwunmi acknowledged that the Binance platform was not only accessible but also actively marketed to Nigerian users during the period under review. This admission underscores the widespread presence of Binance in the Nigerian digital landscape, despite the CBN’s earlier restrictions on financial institutions. When pressed on the legality of cryptocurrency trading, Akinwunmi confirmed, "I am aware that cryptocurrency trading and its usage were restricted at some point in Nigeria." This phrasing is critical, as it suggests a nuanced regulatory environment where an outright blanket prohibition might be debatable depending on the specific period and interpretation of existing directives.

Akinwunmi further elaborated on the CBN’s understanding of the sector’s evolution, stating, "I am aware that development in cryptocurrency has been around for upwards of ten years." This indicates an awareness within the CBN of the long-term presence and technological advancement of digital assets, even while regulatory frameworks lagged.

The crux of the CBN’s argument, however, lies in the alleged clandestine nature of Binance’s operations. Akinwunmi maintained that Binance’s "usage of the Nigerian banking system was hidden by the use of pseudonyms by users of the platform." This accusation points to a perceived deliberate obfuscation, where individuals transacted using aliases rather than verified identities, thereby bypassing traditional Know-Your-Customer (KYC) and Anti-Money Laundering (AML) protocols typically enforced by regulated financial entities. He further stated that "There were times when there was free access to its platform, and there were also times when it was not accessible except through covert channels," suggesting that Binance either adapted its accessibility based on regulatory pressure or facilitated methods for users to circumvent restrictions.

Crucially, the CBN official refrained from confirming whether Binance deliberately intended to hide its operations, a point that Binance’s defense will likely exploit. Similarly, he could not unequivocally state whether any official order explicitly classified cryptocurrency as foreign exchange at the time, leaving room for interpretation regarding the precise regulatory classification and its implications for Binance’s operations. The CBN’s focus appears to be on the lack of official authorization and the methods employed, rather than proving direct intent to defraud, which would be a higher legal bar.

The EFCC’s Broader Case: Money Laundering Act and Conspiracy

The EFCC’s charges against Binance and its executives are formidable, invoking the Money Laundering (Prevention and Prohibition) Act, 2022. This Act is Nigeria’s primary legal instrument for combating financial crimes, requiring strict compliance from financial institutions and designated non-financial businesses and professions (DNFBPs). The EFCC alleges that Binance and its executives "conspired to conceal the origin of proceeds of alleged unlawful activities," specifically targeting the movement of $35.4 million. The core of the EFCC’s argument is that by facilitating transactions without proper regulatory oversight and allowing the use of pseudonyms, Binance effectively created a conduit for illicit funds, violating the fundamental principles of financial transparency and accountability.

The 2022 Act imposes stringent obligations, including reporting suspicious transactions, conducting customer due diligence, and maintaining records. The EFCC likely argues that Binance failed in these duties, thereby aiding and abetting money laundering. The inclusion of individual executives, Tigran Gambaryan and Nadeem Anjarwalla, further underscores the EFCC’s intent to hold individuals accountable for corporate actions, a common strategy in high-profile financial crime cases.

A Chronology of Escalation: From Restrictions to Detentions

The current trial is a culmination of a series of escalating actions by Nigerian authorities against cryptocurrency platforms, particularly Binance, throughout early 2024:

• Early 2024: The National Security Adviser (NSA) publicly declared cryptocurrency trading a national security issue. This elevated the perceived threat level of unregulated crypto activities, linking them directly to broader security concerns like terrorism financing and economic sabotage.
• February 2024: The CBN issued directives to major fintech firms, including OPay, Moniepoint, Paga, and PalmPay, instructing them to restrict accounts linked to crypto transactions. This move further tightened the noose on crypto access, particularly for retail users who relied on these mobile money platforms for fiat on/off-ramps.
• February 2024: Binance came under intense scrutiny, facing allegations of currency manipulation and money laundering. In response to mounting pressure, the platform disabled its peer-to-peer (P2P) services for Nigerian users, a significant blow given the popularity of P2P trading in the country.
• February 2024: Two senior Binance executives, Tigran Gambaryan, Head of Financial Crime Compliance, and Nadeem Anjarwalla, Regional Manager for Africa, were detained by Nigerian authorities. Their detention sparked international outrage and diplomatic interventions.
• March 2024: Nadeem Anjarwalla reportedly fled the country under mysterious circumstances, intensifying the legal and diplomatic complexities of the case.
• May 2024: Tigran Gambaryan was eventually released on health grounds, following significant diplomatic engagements, particularly from US lawmakers and the US government, who advocated for his release. His release, however, did not signify the end of the charges against Binance as a corporate entity.
• June 2024: The Federal Inland Revenue Service (FIRS) separately filed tax-related charges against Binance, alleging it owed significant taxes and was liable for "economic losses" amounting to an astronomical $81.5 billion. This marked yet another front in Nigeria’s multi-pronged legal attack against the exchange.
• Ongoing: Binance has reportedly been exploring an out-of-court settlement with the FIRS, with a report on the settlement expected on May 12, 2026.
• Ongoing: The criminal trial initiated by the EFCC, following Dr. Akinwunmi’s testimony, has been adjourned to May 15, 2026, for continuation.

Beyond the CBN: SEC and FIRS Join the Fray

The CBN’s testimony is part of a broader, coordinated regulatory push involving multiple Nigerian agencies. The Securities and Exchange Commission (SEC), Nigeria’s capital market regulator, has also been vocal in its demand for tighter cryptocurrency regulations. The SEC has explicitly pushed for the removal of the Naira as a trading pair on P2P platforms, aiming to further restrict direct fiat-to-crypto conversions and reduce the perceived impact of crypto on the Naira’s value. The SEC’s efforts align with its mandate to protect investors and ensure market integrity, advocating for a licensing regime for Virtual Asset Service Providers (VASPs) to bring them under formal regulatory oversight.

Meanwhile, the Federal Inland Revenue Service (FIRS) has opened another significant legal front. The FIRS has accused Binance of having a "significant economic presence" in Nigeria, thereby making it liable for corporate taxes, Value Added Tax (VAT), and other levies. The FIRS’s claim for $81.5 billion in "economic losses and unpaid taxes" is staggering and underscores the Nigerian government’s determination to reclaim perceived lost revenue from international tech companies operating within its borders without formal registration or tax compliance. The potential out-of-court settlement with FIRS suggests Binance is actively seeking resolutions on various fronts to mitigate its legal exposure in Nigeria.

Implications and Future Outlook for Nigeria’s Crypto Landscape

The ongoing legal battles and the CBN’s testimony carry profound implications for Binance, Nigeria’s burgeoning crypto community, and the broader financial sector.

For Binance, the outcome of these cases could significantly impact its operational model in a key African market. A conviction could lead to substantial fines, stricter operational mandates, and a potential ban, further damaging its global reputation already challenged by regulatory actions in other jurisdictions. The long adjournment dates, stretching into 2026, suggest the complexity of the legal process and the volume of evidence to be presented, indicating a protracted struggle.

For Nigerian cryptocurrency users, the crackdown has already led to reduced accessibility, heightened scrutiny, and increased operational hurdles. The removal of P2P Naira trading pairs and restrictions on fintech accounts have pushed many users towards less regulated, potentially riskier, avenues or offshore platforms. This creates a dilemma for authorities: while aiming to control illicit flows, they risk stifling legitimate innovation and pushing economic activity further into the shadows.

For the Nigerian economy and regulatory landscape, these events mark a critical juncture. The government’s firm stance signals its determination to assert sovereign control over financial flows, protect the Naira, and ensure tax compliance from all entities, domestic and foreign. The ongoing trials could set precedents for how digital asset service providers are treated under Nigerian law, potentially paving the way for a clearer, albeit stricter, regulatory framework. The challenge remains for Nigeria to balance its legitimate concerns about financial stability and security with the potential for blockchain technology and digital assets to foster innovation, attract foreign investment, and empower its digitally native population.

The coming years will be crucial in defining the future of cryptocurrency in Nigeria. As the legal proceedings unfold and new regulatory guidelines emerge, the interplay between innovation, regulation, and enforcement will undoubtedly shape Nigeria’s position in the global digital economy. The world watches keenly as Nigeria, a nation at the forefront of crypto adoption, navigates the complexities of integrating digital assets into its traditional financial system.