Nigerian Court Demands Binance to Reveal User Data Following Allegations of Criminality

A Nigerian High Court has mandated Binance Holdings to furnish the Economic and Financial Crimes Commission (EFCC) with extensive information regarding Nigerian users engaging in trading activities on its platform.

The court’s decision, delivered by Justice Emeka Nwite on February 29 in response to an ex parte motion initiated by the EFCC against Binance, requires the cryptocurrency exchange to comply with the request.

An ex parte motion, involving only one party without prior notice to the opposing side, was filed by the EFCC’s legal representative, Ekele Iheanacho, who argued that Binance’s operations within Nigeria carry indications of criminal behavior.

These contentions are based on Sections 38 of the EFCC Act, 2004, and Section 15 of the Money Laundering (Prevention and Prohibition) Act, 2022 (as amended), which mandate reporting suspicious transactions to authorities under penalty for non-compliance.

According to an affidavit submitted by EFCC operative Hamma Bello, the Commission received intelligence on alleged money laundering and terrorism financing activities linked to Binance, prompting an ongoing investigation.

Bello revealed that the EFCC identified users exploiting the cryptocurrency platform for illicit activities such as price manipulation, market distortions, and confirmation, all contributing to the devaluation of the Nigerian naira against other currencies.

The EFCC communicated the detrimental effects of these activities on Nigeria’s economy to Binance, urging the platform to remove the naira from its trading options.

Nathaniel Luz, CEO of Flincap, noted that while the court order benefits the Nigerian government, a constructive dialogue between Binance and the government would be preferable.

Bayo Onanuga, presidential adviser on information and strategy, alleged that platforms like Binance have manipulated the naira, leading to its significant depreciation. Onanuga advocated for considering a ban on such platforms in Nigeria.

Despite these challenges, Nigeria has witnessed rapid growth in its crypto economy, emerging as one of the world’s leading adopters of cryptocurrencies in 2023.