The crackdown on cryptocurrency exchanges in Nigeria escalates as two Binance executives are detained amidst allegations of currency manipulation and illicit fund movements. This move is part of efforts to stabilize the foreign exchange market and safeguard the local currency, the naira.
Is Binance Responsible for Naira’s Decline?
In a highly intense drama, the media, Premium Times reported that Nigerian authorities detained Binance executives after they flew into the country to negotiate amid a broader crackdown on crypto platforms, including Binance, Kraken, and Coinbase. Concerns over the use of crypto platforms for criminal activities and their impact on the naira prompted regulatory action despite warnings from agencies like the Nigeria Securities and Exchange Commission.
The deadlock in negotiations between Binance and Nigerian officials, including demands for transaction data and embassy involvement, led to the executives’ detention for at least twelve days.
However, before the detention, Nigerian officials, including Bayo Onanuga, a special adviser to President Bola Ahmed Tinubu, blamed Binance for the naira’s rapid decline. Following this, the Nigerian Communications Commission directed telecom companies to restrict access to websites of Binance, Coinbase, and Kraken for residents.
Central Bank Says Binance Helps Illicit Activities?
Alternately, the Central Bank of Nigeria raised alarms over $26 billion flowing through Binance Nigeria within a year, highlighting concerns about illicit financial activities. Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso shared that Nigeria’s anti-corruption wing, along with the police and the national security advisor’s office, is teaming up to investigate cryptocurrency exchanges.
An unnamed source, cited by the Financial Times, disclosed that authorities are now asking for a list of all Binance users in Nigeria since the company started operating there.
What’s the root cause and crypto impact?
Notably, Binance’s way of trading is the cause of this crackdown, called peer-to-peer (P2P), which worries Nigeria. With P2P, people can trade directly on Binance without a middleman. But sometimes, they sell a type of currency called USDT at prices higher than usual in Nigeria. The government thinks this is hurting Nigeria’s currency, naira. So, they blocked Binance’s website and others in a way to restrict local transactions.
In response, Binance has disabled its P2P feature due to the government’s crackdown, preventing users in Nigeria from transacting among themselves. In the meanwhile, at the time of writing, rumors were indicating that Binance might have removed the USDT/naira trading option.
The future of crypto trading in Nigeria remains uncertain amidst ongoing investigations and regulatory pressure, reflecting broader global debates on crypto regulations and financial stability.
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