Nigerian Court Freezes 1,146 Bank Accounts Linked to Alleged Crypto Fraud on Binance

The Federal High Court in Abuja has approved the Economic and Financial Crimes Commission (EFCC) an interim order to freeze 1,146 bank accounts linked to alleged forex manipulation, money laundering, and terrorism financing on cryptocurrency exchanges like Binance.

The court order, issued by Justice Emeka Nwite, allows the EFCC to investigate the accounts for 90 days.

The EFCC had filed an ex parte application, stating that the accounts were linked to individuals and companies taking advantage of virtual cryptocurrency exchange platforms to illegally manipulate the value of the Naira and launder proceeds of unlawful activities.

The accounts belong to various individuals and organizations, including Akitoye Adeyemi Ayomide, Clyp Trading Ltd, Clyp Consulting Ltd, Toyetech Platforms Ltd, and others "ranging from entities involved in various sectors, including agri-businesses, logistics, microfinance banks, and engineering."

The EFCC investigation revealed that the total trading volume from Nigeria on Binance in 2023 alone was $21.6 billion. The court had previously ordered Binance Holdings Limited to provide the EFCC with comprehensive data or information on all persons from Nigeria trading on its platform, as the agency uncovered users deploying the platform for price discovery, confirmation, and market manipulation, resulting in the naira losing value against other currencies.

Why this matters: The freezing of over a thousand bank accounts linked to alleged fraud on Binance highlights the growing concerns around cryptocurrency exchanges being used for illegal activities such as money laundering and terrorism financing. This case emphasizes the need for stronger regulations and oversight in the rapidly developing world of digital currencies to protect the integrity of financial systems and prevent criminal exploitation.

The EFCC is currently prosecuting Binance and two of its executives on alleged money laundering charges, while the Federal Inland Revenue Service (FIRS) is prosecuting the company on alleged tax evasion offences. The court has adjourned the matter until July 23 for further proceedings.

"The Central Bank of Nigeria (CBN) has banned mobile money operators, including fintech firms, from onboarding new customers until further notice," linked to an ongoing audit of the Know Your Customer (KYC) process of the fintechs, which have been under scrutiny in recent months over concerns around money laundering and terrorism financing.

Key Takeaways

• EFCC granted 90-day order to freeze 1,146 bank accounts linked to forex manipulation
• Accounts belong to individuals, companies in various sectors, including agri-business, logistics
• EFCC investigation revealed $21.6B trading volume on Binance from Nigeria in 2023
• EFCC prosecuting Binance, executives on money laundering; FIRS on tax evasion
• CBN bans new customer onboarding for mobile money operators, fintech firms