Nigeria's Crypto Controversy: CBN Denies Directive Amid Binance Scrutiny

The Central Bank of Nigeria (CBN) has recently refuted a report suggesting it mandated banks and financial institutions to identify and restrict transactions with cryptocurrency exchanges, placing affected accounts on a Post No Debit (PND) status for six months. A PND instruction essentially bars account holders from engaging in debit transactions, such as withdrawals or payments.

Initially denying the report on X, the CBN later retracted the denial, admitting the allegations were false. The bank asserted its commitment to identifying and penalizing individuals involved in illicit Tether transactions, particularly those utilizing peer-to-peer (P2P) methods.

The purported circular also outlined restrictions on regulated financial institutions involved in crypto transactions or facilitating payments for crypto exchanges. This seems contradictory to a previous lift on such bans in December 2023, permitting banks to facilitate crypto transactions. This relaxation came nearly two years after the initial comprehensive ban on bank-crypto engagement.

The CBN's decision to lift restrictions in 2023 was attributed to the growing global demand and adoption of cryptocurrencies, deeming the prior strict measures unjustifiable. However, amid the rapid devaluation of the naira and soaring inflation rates reaching 29.9%, the government redirected its focus towards platforms offering cryptocurrency services. It took action against websites facilitating crypto trading, especially those setting informal naira valuations.

Binance, a prominent player in the crypto space, faced intensified scrutiny when the CBN expressed concerns over suspicious financial activities linked to Binance Nigeria in 2023. The CBN's Head, Olayemi Cardoso, revealed that an estimated $26 billion flowed through Nigeria via Binance in 2023 from undisclosed sources and users.

Adding to Binance's woes in Nigeria, one of its executives, Tigran Gambaryan, based in the United States, was detained in the country. Gambaryan faces five charges related to money laundering following discussions with Nigerian officials regarding Binance's regulatory compliance.

In another twist, Nadeem Anjarwalla, an executive involved in regulatory discussions with Nigerian officials regarding Binance, managed to escape custody and was later traced to Kenya, where extradition proceedings are underway.