LAGOS, Nigeria (VOICE OF NAIJA) – A Director Registration, Exchanges and Market Infrastructure Department at Security and Exchange Commission (SEC), Abdulkadir Abbas, told a Federal High Court in Abuja that the mode of Binance operation of peer-to-peer trading on its platform have had a negative effect on the naira.
Abbas, who testified as the first witness in the trial on Friday told Justice Emeka Nwite, that the operation employed by the largest cryptocurrency platform was illegal and against the trading route put in place by regulators.
Voiceofnaija.ng reports that that the Nigerian government had accused Binance and its executives, Tygran Gambaryan and Nadeem Anjarwalla (who escaped from lawful custody), of allegedly conspiring amongst themselves to conceal the origin of the financial proceeds of their alleged unlawful activities in Nigeria, including money laundering.
The witness added: “At the meeting, it was clearly observed that the first defendant’s (Binance’s) mode of operation is against the provision of the Investment and Securities Act 2007.”
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“Apart from not being registered in Nigeria and making public solicitation without authorisation, the first 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 platform for crypto exchange.”
The director further added that the number of crypto users on the binance platform further contributed to the devaluation of the naira in the official exchange rate.
“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.”
“As a matter of fact, the Binance platform became a reference point for determining the exchange rate.”
“The naira P2P model created uncertainty and high level of volatility in the exchange rate as Nigerian users trade arbitrarily on the platform, thereby impacting negatively on financial system stability.”
“The naira P2P rate quoted on Binance’s platform is not referencing 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.”
Witness claimed that the rate at which naira was being sold on Binance’s platform had no relationship with the official exchange rate, and the rate on Binance’s platform was not driven by any fundamentals.
According to him, it got to a stage where the value of the naira was determined by the rate quoted on Binance’s platform which has no correlation with the exchange rate.
He added that Binance engaged in public solicitation of Nigerians without permission by SEC nor registered for the operation in Nigeria, saying “This is also an infraction,” in breach of the extant provisions of the Investment and Securities Act 2007.
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“In addition, by making public solicitation to Nigerians without due authorization by the SEC, the first defendant violated the Investment and Security Act,” he said.
Following the conclusion of Abbas’s 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 submitted an application to that effect earlier in the day, which was yet to be approved.
He sought a short stand down to enable him confirm if his application was approved and if the documents could be made available to him.
Justice Nwite declined Gambaryan bail application request, who is currently held in Kuje Correctional Centre, Abuja
The judge noted that since his application was filed on Friday, it might be difficult to have it approved if the case was stood down.
Justice Nwite then adjourned till May 23 at 12 noon for cross examination.
Justice Nwite held that there was the likelihood that Gambaryan would jump bail, bearing in mind the fact that he has no family members or relatives in the country.
He agreed with the prosecution that with the earlier escape of Gambaryan’s co-defendant, Nadeem Anjarwalla (the Binance Regional Manager for Africa) from custody, it would be unwise to grant bail to Gambaryan.
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Also, the court adjourned till May 22 for the arraignment of Binance and Gambaryan on an amended tax evasion charge brought against them by the Federal Inland Revenue Service (FIRS).
The FIRS amended the charge to reflect that Anjarwalla, earlier listed as one of the defendants, was now at large.
In Count one of the charges, the accused persons are alleged to have been involved in carrying and offering services to subscribers on their platform, known as Binance which they failed to register with the FIRS for the purpose of paying all relevant taxes administered by the service.
The offences are said to be punishable under Sections 8 and 29 of the VAT Act of 1993 (as Amended), Section 40 of the FIRS Establishment Act, 2007 (as amended) and under provisions of Section 94 of the Companies Income Tax Act (as amended) respectively.
The Nation