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Binance breached law, operated naira P2P in exchange for crypto assets - Witness

The witness said he met Gambaryan once during a meeting at the office of the National Security Adviser (NSA).

Nigerian officials accused of seeking $150 million bribe from Binance to dissolve case

Abbas, the Director of Registration, Exchanges and Market Infrastructure Department at SEC, disclosed this while testifying before Justice Emeka Nwite in the trial of Binance and two of its officials on a charge bordering on money laundering.

Abbas, the 1st prosecution witness (PW1), said that due to the large number of Nigerian users, who were leveraging on the 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,” he added.

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The News Agency of Nigeria (NAN) reports that the Economic and Financial Crimes Commission (EFCC) had filed a 5-count charge against Binance and Tigran Gambaryan as 1st and 2nd defendants while listing Nadeem Anjarwalla as being at large.

Led in evidence by prosecuting lawyer, Ekele Iheanacho, Abbas said the operations of the company negatively impacted Nigeria’s financial system.

The director, who is the 1st prosecution witness (PW1), told the court that not only did Binance operate in Nigeria illegally, but its mode of operation circumvented the normal currency trading route put in place by regulators.

The witness 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.

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“At the meeting, it was clearly observed that the 1st defendant (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 1st 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 certain settlement platforms 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,” he said.

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According to him, the naira P2P model created uncertainty and a high level of volatility in the exchange rate as Nigerian users trade arbitrarily on the platform, thereby impacting negatively financial system stability.

“The naira P2P rate quoted on Binance’s platform does not reference 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,” the PW1 said

He added that the rate at which naira was being sold on Binance’s platform had no relationship with the official exchange rate.

Abbas said the rate on Binance’s platform was not driven by any fundamentals, adding that it got to a stage where the value of the naira was determined based on the rate quoted on Binance’s platform.

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He said the rate had no correlation or relationship with the official rate.

He said by operating its platform, which was not registered or regulated by the SEC in Nigeria, Binance was in breach of the extant provisions of the Investment and Securities Act, 2007

“In addition, by making public solicitation to Nigerians without due authorisation by the SEC, the 1st defendant violated the Investment and Security Act,” the witness said.

After his evidence-in-chief, lawyer to Binance, Babatunde Fagbohunlu, SAN, said he needed to retrieve some documents from the court with which he planned to cross-examine the witness.

Fagbohunlu said he applied that effect earlier in the day, which was not yet approved.

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He sought a short stand down to enable him to confirm if his application was approved and if the documents could be made available to him.

Justice Emeka Nwite noted that since his application was filed today, it might be difficult to have it approved if the case was stood down.

Justice Nwite elected to adjourn till May 23 at noon for cross-examination.

NAN reports that Anjarwalla, who was in lawful custody with Gambaryan, escaped and fled the country on March 22.

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