By Chidiebere Atu
In a significant move that highlights Nigeria’s ongoing crackdown on cryptocurrency platforms, the Economic and Financial Crimes Commission (EFCC) has secured a court order to freeze N548.6 million in bank accounts belonging to suspected cryptocurrency users. This action targets users of platforms such as ByBit, KuCoin, and others, who are accused of contributing to fluctuations in the value of the naira.
The motion, which was filed on September 3, 2024, and granted by the Federal High Court, has drawn attention to the potential role foreign cryptocurrency platforms may be playing in Nigeria’s currency devaluation. The EFCC alleges that these platforms are enabling price discovery, market manipulation, and other activities that have caused the naira to lose value against major foreign currencies.
A Broader Campaign Against Crypto Platforms
This development is part of a larger legal and prosecutorial effort by Nigerian authorities to combat foreign exchange violations and tax evasion associated with foreign cryptocurrency platforms. Earlier in February 2024, Nigeria’s security agency arrested two executives from Binance following allegations of money laundering and terrorism financing activities linked to crypto exchanges. The EFCC has since filed charges against Binance and Tigran Gambaryan in a money laundering case involving $35.4 million.
With the recent court order, the focus has now shifted to other platforms like ByBit and KuCoin. The EFCC accuses these platforms of allowing Nigerian users to engage in unauthorized foreign exchange trading and cryptocurrency transactions that have disrupted the local economy.
Allegations of Naira Manipulation
According to EFCC investigator Okoro Philip, the devaluation of the naira can be directly traced to activities on cryptocurrency platforms. He stated that Nigeria had seen some success in stabilizing its currency earlier in 2024, with the naira trading at N980 to $1 on the black market. However, on April 18, 2024, the naira dramatically plunged to N1,250 to $1, an event that Philip attributes to manipulative trading on platforms like ByBit and KuCoin.
The EFCC contends that these platforms have allowed Nigerian users to buy and sell USDT (Tether, a stablecoin pegged to the US dollar) at unfavorable rates, exacerbating the naira’s devaluation. The agency claims that over 22 bank accounts linked to these platforms have been used to facilitate these transactions. The accounts belong to users who engage in cryptocurrency exchanges without the proper licenses or regulatory oversight, contributing to economic instability.
A Focus on Foreign Exchange Violations
The prosecution is also building a case against the crypto platforms for failing to comply with Nigeria’s anti-money laundering laws. The EFCC claims that these platforms have allowed transactions to occur under a “cover of secrecy,” further complicating efforts to stabilize the naira and address broader financial crimes, including terrorism financing.
EFCC counsel, Ekele Iheanacho, has urged the court to freeze the bank accounts listed in its schedule until the investigation and subsequent prosecutions are concluded. The identified accounts include those of Kora Payment Network, AD Ishola Farms Ltd, and Microcore Tech Investment Services.
Final Thoughts
As Nigeria continues to grapple with the economic implications of cryptocurrency trading, this latest move by the EFCC signals a tightening of regulations around foreign cryptocurrency platforms operating in the country. Whether these legal actions will have a lasting impact on the naira’s stability remains to be seen, but it is clear that the Nigerian government is committed to curbing illegal foreign exchange activities and enforcing greater compliance with its financial laws.
This case marks a pivotal moment in Nigeria’s evolving relationship with cryptocurrency, one that could have far-reaching implications for both the local economy and the global crypto market. Stay tuned as we follow these developments closely.
