A director at the Security and Exchange Commission (SEC), Abdulkadir Abbas, has told the Federal High Court, Abuja, that the cryptocurrency exchange platform, Binance Limited, used its Naira peer-to-peer (P2P) virtual feature to devalue the Nigerian currency.
Abbas, who identified himself as Director, of Exchanges and Market Infrastructure (SEC), told Justice Emeka Nwite on Friday that the Naira P2P feature deployed by Binance as well as the number of people on the platform "adversely affected the official exchange rate."
Nairametrics reports that the Nigerian government had accused Binance and its executives, Tygran Gambaryan and the fleeing Nadeem Anjarwalla, of allegedly conspiring amongst themselves to conceal the origin of the financial proceeds of their alleged unlawful activities in Nigeria, including $35,400, 000.
The Nigerian authorities said they committed an offense contrary to Section 21 (a) and punishable under Section 18(3) of the Money Laundering (Prevention and Prohibition) Act, 2022.
The trial commenced on Friday after the judge declined Gambaryan's bail request.
What transpired during the trial
Led in evidence by counsel for the Economic and Financial Crimes Commission (EFCC), Ekele Iheanacho, the SEC director said Binance operated a trading platform that was not registered or regulated by the SEC and was in breach of the extant provision of relevant laws in Nigeria
He added that Binance engaged in public solicitation of Nigerians without permission by SEC, saying "This is also an infraction."
"The first defendant(Binance) operates a Naira Peer-to-Peer transaction in exchange for the crypto asset.
"As a matter of fact, the Binance platform became a reference point for determining the exchange rate," the witness added.
The director said the Binance model invariably created uncertainty and Nigeria's exchange values were raised arbitrarily on the platform, thereby impacting negatively on the country's financial system stability.
"The Naira P2P deployed on Binance website affects the values of our Naira.
"This is one serious concern raised at the meeting we had at the office of the National Security Adviser."
Explaining the relationship between the rates on the Binance platform and the official exchange rate, the witness said the Naira P2P rate was not guided by any fundamental principles.
"It reached a stage where if one wants to exchange the US dollars, Nigerians will go to the Binance platform for a rate that has no correlation with Nigeria's official rate," Abbas said.
Cross-examination
Gambaryan's lawyer, Babatunde Fagbohunlu (SAN), told the judge that there were aspects of the cross-examination that would require documents already tendered in court as proof of evidence.
He said he had applied for the certified true copies of the exhibits but had yet to get them.
He asked for an adjournment.
Subsequently, the case was adjourned to May 23 for cross-examination of the prosecution's first witness.
More insights
SEC is a Federal Government agency that carries out registration of all capital market stakeholders, instruments to be traded on the market, and all the trading platforms.
In addition, the SEC makes rules and regulations on the capital market, conducts investigations, investigates enforcement as well as monitors the market.
Nairametrics reports that a popular method of buying and selling crypto is through Peer-to-peer, otherwise known as P2P.
The seller and buyer are connected in what can be likened to a marketplace.
Binance and its executives are faced with two separate suits by the FIRS and EFCC; the former bordering on tax evasion while the latter on money laundering and foreign exchange contravention.
Nairametrics recalls that the executives have also instituted a fundamental rights case against agencies of the Nigerian government, citing a violation of their constitutional right to liberty.
On February 28, Nigerian authorities detained two senior Binance executives, Nadeem Anjarwalla, a 37-year-old British-Kenyan who serves as the regional manager for Africa, and Tigran Gambaryan, a 39-year-old American who is the head of financial crime compliance at Binance.
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