Nigeria’s regulator has frozen the bank accounts of Kucoin and Bybit users

What’s new? Nigeria’s Economic and Financial Crimes Commission (EFCC) has received court approval to freeze bank accounts totaling over $330 000 belonging to suspected users of global centralized crypto exchanges (CEXs) Kucoin and Bybit. According to officials, these users manipulated the nation’s currency during their trading activities, which contributed to its plummeting value. The exchanges are also accused of failing to comply with anti-money laundering and anti-terrorist financing regulations.

Material by NairaMetrics

What else is known? EFCC investigator Okoro Philip directly accused crypto traders on Bybit and Kucoin of driving down the naira’s exchange rate. Thus, the September 3 lawsuit accuses the bank account holders of illegal transactions in foreign exchange and cryptocurrencies. It also criticized Kucoin and Bybit for failing to comply with mandatory anti-money laundering regulations.

The investigator explained that the exchanges allow Tether’s USDT stablecoins to be exchanged with a peg to the US dollar exchange rate for other currencies, including the naira. In turn, the exchange rates determined by users of these cryptocurrencies negatively affect the naira by artificially undervaluing it.

In addition, EFCC alleges that the said exchanges circulate funds linked to criminal, including terrorist, activities.

The commission targeted global crypto exchanges just days after the Central Bank of Nigeria (CBN) tried to stop the naira from falling. So, the CBN sold dollars to exchanges at a lower rate than the official foreign exchange market.

The intervention followed weeks of continuous decline in the naira exchange rate, which is associated with a sharp increase in demand for dollars. Since the beginning of the year, the naira exchange rate has declined by about 70%. Experts believe the decline will continue until the country reduces the demand for dollars.

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In July, the crypto exchange OKX announced its withdrawal from Nigeria. Local customers have been unable to access their accounts since August 30, but their remaining funds are still protected, OKX claims.

Binance had earlier stopped supporting the Nigerian national currency in its products. Nigerian authorities back in February accused the exchange of tax evasion, arresting its senior executives Tigran Gambaryan and Nadeem Anjarwalla. The latter managed to escape from arrest, Gambaryan has been in jail all this time and appeared in court on September 2.

In detention, Gambaryan’s health deteriorated due to malaria and pneumonia, as well as an intervertebral hernia. The prosecutor’s office, contrary to claims by relatives, maintains that he refused treatment. US officials called Gambaryan’s arrest a hostage-taking and urged the White House to help secure his release as soon as possible.