A court order has been obtained by the Economic and Financial Crimes Commission (EFCC) to freeze N548.6 million (about $670,000 USD) that is believed to be in accounts held by users of the cryptocurrency platforms ByBit and KuCoin.
The Commission alleges these platforms played a role in the recent devaluation of the Nigerian naira.
This case is a part of a bigger push by the Nigerian government to address suspected tax fraud and foreign exchange crimes by foreign cryptocurrency platforms operating within the country.
The action was made public in a September 3, 2024 court motion.
The EFCC is specifically accusing ByBit and KuCoin, along with several other unnamed platforms, of enabling “price discovery, confirmation, and market manipulation” that resulted in the naira losing value against other currencies.
“These fluctuations were primarily driven by activities on platforms such as ByBit, KuCoin, and other similar cryptocurrency platforms,” stated EFCC investigator Okoro Philip in his affidavit.
He pointed to a sharp drop in the naira’s value on April 18, 2024, when it went from N1,250 to N1,980 to $1 USD on the black market, reversing months of government efforts to stabilise the currency.
According to the EFCC, 22 bank accounts—which are currently frozen—were utilised by certain persons to enable the exchange of naira for USDT, a virtual currency linked to the US dollar, at prices that were harmful to Nigeria’s financial system.
These people, according to the Commission, were not allowed to deal in foreign exchange and were instead using sites like KuCoin and ByBit.
“ByBit is a cryptocurrency platform where the exchange of USDT (a digital dollar) to other currencies, including the naira, takes place,” the EFCC stated in its case filing. “One USDT is approximately equivalent to one United States dollar (USD). The exchange rates determined by users of these cryptocurrencies adversely affect the value of the naira by artificially lowering its value.”
The EFCC further alleges that these platforms are being used to launder proceeds of crime and to finance terrorist activities, due to the anonymity they afford users. The agency has requested and received detailed information from banks about the 22 frozen accounts.
This most recent move comes after a prior court ruling, which was granted on April 25, 2024, and which froze 1,146 accounts for ninety days due to comparable claims of illicit financial transactions.
The EFCC has brought criminal charges against certain account holders and is still conducting its investigation, even if some of those freezing orders were eventually removed.
ByBit and KuCoin have yet to publicly respond to the allegations.
