Court unfreezes accounts blocked for cryptocurrency trading

..Says CBN circular to banks is not a law

A Federal High Court sitting in Abuja has vacated with immediate effect an interim order through which the Central Bank of Nigeria (CBN) froze the bank accounts in two banks of a firm that traded in cryptocurrency.

The firm, Rise Vest Technologies Ltd, is one of the firms offering brokerage services for Nigerians to invest in foreign stocks.

The CBN had claimed, among others, that some of such deals contravened its directive and were part of what was making the Naira weaker to the United States Dollar.

But Justice Taiwo O. Taiwo held that the CBN could not rely on a mere circular to freeze the bank account of a company using its bank accounts to trade in cryptocurrency.

The judge noted that the CBN failed to provide any law showing that it is illegal to deal in cryptocurrency in Nigeria, adding that the CBN circular, referenced as BSD/DIR/PUB/LAB/014/001 of February 5, 2021, is not a law.

Justice Taiwo ordered the banks – Zenith Bank Plc and Guaranty Trust Bank – to immediately grant the firm unfettered access to the accounts.

The court made the order while ruling on a Motion on Notice brought by Rise Vest Technologies, praying the court to discharge an interim freezing order granted by the court on August 17, 2021, in Suit No: FHC/ABJ/CS/822/2021

The parties to the suit are CBN Governor (Plaintiff/Respondent) V Rise West Technologies Ltd (1st Defendant/Applicant) & five Others.

Rest Vest Technologies’ Counsel, Mr Seni Adio (SAN), had submitted that CBN did not present any evidence that the defendant engaged in any unlawful conduct, adding that the CBN did not meet its burden of proof in support of its allegations.

But CBN’s counsel Mr Mathew Onoja argued that the ex-parte orders of the court sought to be set aside were proper, lawful and valid.

He contented that the orders of August 17, 2021 in the suit were in accordance with the provisions of Section 97 (1) of the Banks and Other Financial Institutions Act (BOFIA) 2021, which empowered the Plaintiff/Respondent to invoke the jurisdiction of the Court via an ex parte application.

In his ruling, Justice Taiwo upheld Adio’s argument.

The judge observed, among others, that although the CBN had power to investigate any infraction, the infraction must relate to BOFIA or any other enactment administered by the regulator.

Justice Taiwo held: “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.

“The learned counsel for the respondent has also raised the issue of public policy in his submissions against the application.

“Can this court decide this application based on public policy as being urged on it by the learned counsel for the respondent? I think not.

“I hereby discharge the interim freezing order of this court made on August 17, 2021, made against the defendant/ applicant.”