Again, the Central Bank of Nigeria (CBN) has ordered all Nigerian commercial banks to freeze the accounts of some individuals, who it said have been trading in cryptocurrency.
In a Post-No-Debit circular signed by the Director of Banking Supervision, J. Y. Mammanand, and addressed to the bank on November 3, the financial regulator directed that the funds belonging to Nnamdi Francis Okereke, Nwaorgu Kingsley Chibuzor, and a company called TVS Hallmark Service Limited be frozen.
“You are hereby directed to close accounts of the underlisted bank customers and place the funds in the accounts in suspense accounts for engaging in cryptocurrency trading in contravention of CBN Circular BSD/DIR/PUB/014/001 dated February 5, 2021.”
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This is in continuation of the step taken by the apex bank early in the year, against those trading cryptocurrency in Nigeria.
In February, the apex bank ordered banks and other financial institutions to close all customer accounts used in trading cryptocurrencies and other related transactions.
The order was proclaimed through a circular distributed to deposit money banks, non-bank financial institutions and other financial institutions to “identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.”
Consequently, a host of individual and company accounts were suspended from carrying out any financial transactions. The CBN had banned all regulated financial institutions from dealing in any crypto-related transactions, on the allegation that cryptocurrencies pose a threat to Nigeria’s economy, and it’s being used to sponsor terrorism.
“Further to earlier regulatory directives on the subject, the Bank hereby wishes to remind regulated institutions that dealing in crypto currencies or facilitating payments for cryptocurrency exchanges is prohibited,” the CBN said in the circular.
Among the accounts frozen by the banks following the central bank’s directive were; Bamboo, Risevest, Trove and Chaka. These companies facilitate cryptocurrency trading and brokerage services for Nigerians to invest in foreign stocks, a service the CBN said it contravenes its circular.
However, these companies and other individuals, whose bank accounts were frozen based on the circular, filed a lawsuit challenging the banks’ action.
Last month, A Federal High Court sitting in Abuja vacated the interim order which directed the banks to suspend all funds belonging to the affected accounts.
In his ruling, the presiding judge, Taiwo O Taiwo, said the CBN failed to provide any law showing that it is illegal to deal in cryptocurrency in Nigeria.
“I have perused the counter affidavit of the Respondent and I see that the reason for freezing the account of the applicant is based on the alleged infraction of the circular of the CBN.
“The law is trite that any conduct that must be sanctioned must be expressly stated in a written law.
“Being unknown to law, circulars cannot create an offence because it was not shown to have been issued under an order, Act, Law or Statute,” Justice Taiwo said, and ordered the responsible banks, Zenith Bank Plc and Guaranty Trust Bank, to unfreeze the accounts.
Based on this judgment, CBN’s latest directive to banks to freeze the accounts of individuals, purportedly trading cryptocurrency, has been described as utter disregard for the rule of law.
It has also added to the culminating events, where the financial regulator has been accused of trampling on people’s rights and acting with impunity. One of those events occurred during the End SARS protest, when the central bank illegally blocked the bank accounts of some protestors, on the unfounded allegation of terrorism.