Binance, a widely used crypt exchange with over 170 million users worldwide disabled its peer-to-peer feature for Nigerian users.
Known as the P2P market, the network lets users, buyers, and sellers transact without the intervention of a third party. It gained popularity among Nigerians in 2021 after former president Buhari’s administration outlawed the country’s vibrant Crypto industry.
Following the swift depreciation of the naira, which contributed to inflation reaching an almost three-decade high of 29.9%, the FG shifted its attention to websites that offered cryptocurrency services. These websites have become a viable option for engaging in trade and setting an informal value for the naira.
Concerns were expressed by the Central Bank of Nigeria regarding the $26 billion that came through Binance Nigeria from “unidentified sources” in the previous year.
- “In the case of Binance, $26 billion has passed through Binance Nigeria in the last year alone from sources and users who we cannot adequately identify,” stated CBN Chief Olayemi Cardoso. “.
The head of CBN also suggested that the Office of the National Security Adviser (NSA), the Securities and Exchange Commission (SEC), the Police, and the Economic and Financial Crimes Commission (EFCC) work together to combat such illegal financial activities.
To stop what it views as ongoing manipulation of the foreign exchange market and unlawful money transfers, the Federal government recently disabled the websites of Binance and other cryptocurrency companies.
Two senior Binance officials have been detained in Nigeria as the nation looks to crack down on cryptocurrency exchanges to tame the speculation of the naira
After Nigeria decided to outlaw several bitcoin trading websites last week, the CEOs took a plane to Nigeria. However, the national security adviser’s office apprehended them and confiscated their passports.
The FG asked the executives of the biggest cryptocurrency exchange in the world who are currently in custody to submit information on any transactions made on the Binance platform using Nigerian Naira during the last seven years. They further demanded that some other Nigerian-related data be removed from the Binance site.
First, the government got a court warrant to hold the officials for a minimum of twelve days. In a press conference, President Bola Onanuga’s spokesperson claimed Binance was “blatantly” determining the 🇳🇬 exchange rate and taking over the CBN’s position as the entity that sets currency rates.
Telecom companies were directed by the NCC to restrict access to some of the biggest bitcoin exchanges globally, including Binance, Coinbase, and Kraken.
According to Nigeria’s top state officials, cryptocurrency companies enable money launderers and currency speculators to carry out illegal operations. Authorities think that a major factor in the naira’s decline is the “criminal activities” taking place on the platforms.
According to a report from Chainalysis, Nigeria continues to have the highest cryptocurrency usage in Africa and is among the most developed globally, with a 9% annual growth rate. This places Nigeria in third place out of only six countries that have seen consistent growth since 2021.
Nigeria has one of the youngest demographics in the world, with 43% of its current population under the age of 15, and one of the fastest-growing populations in Africa, with a current population of 223 million. A younger, tech-savvy population combined with declining smartphone costs is opening new avenues for cryptocurrency-related activities.
The federal government reportedly detained two top executives of the popular cryptocurrency trading platform, Binance, on Wednesday over alleged manipulations in foreign exchange trading and speculative activities.
the executives visited Nigeria in response to the country’s recent crackdown on various cryptocurrency trading platforms.
During their stay, they were apprehended by the Office of the National Security Adviser, and their passports were confiscated.
Recently, following the naira’s significant devaluation, which led to inflation soaring to an almost 30-year high of 29.9%, the Nigerian government has intensified its regulation of cryptocurrency platforms.
In response to the detention of its executives, Binance discontinued the trading of the naira against bitcoin and tether cryptocurrencies on its exchange.
What we know
Reports reaching sources suggest that the two Binance executives detained were American and British, following the breakdown of talks between Nigerian government officials and Binance.
- The officials arrived on Sunday to discuss with Nigerian authorities their suspicions of illicit activities occurring on the cryptocurrency platform.
- A source with knowledge of the matter informed Nairametrics that discussions with Binance began last year as the Central Bank of Nigeria (CBN) investigated suspicions of exchange rate manipulations.
- CBN officials had received complaints from cryptocurrency experts about some traders’ illicit activities.
- They accused some crypto traders of placing false quotes without backing them up with actual supply.
- For instance, a rogue trader could quote a rate out of thin air to sell any amount of stablecoin in exchange for the naira, fully aware that they did not have the supply.
- The incentive for such actions was also high, especially since most genuine forex traders (particularly corporates) viewed Binance as a reliable source for exchange rate quotes.
- CBN officials caught wind of these suspicious trades and had been engaging with Binance to provide details supporting them.
- Another source informed Nairametrics that security officials wanted details of the transactions to aid their investigations.
- However, things turned sour after the Binance officials failed to provide the requested information to the apex bank, subsequently requesting to be taken to their respective embassies.
- Frustrated, the government reportedly obtained a court order to detain the officials.
