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Two senior executives at Binance, the world’s largest exchange have been detained in Nigeria, per a Financial Times report.
Citing people familiar with the matter, the report says the executives flew to Nigeria following the country’s decision to ban several cryptocurrency trading websites last week. However, they have been detained by the office of Nigeria’s national security adviser and their passports have been seized.
Additionally, we can confirm that the Binance peer-to-peer (P2P) marketplace has been deactivated in Nigeria. Also, the NGN trading pair on the world’s largest exchange has been disabled. Recall that yesterday, we reported that the Central Bank of Nigeria Governor, Olayemi Cardoso said he was collaborating with the Economic and Financial Crimes Commission (EFCC), the Police, and the Office of the National Security Adviser (NSA) to “protect Nigerians” against market manipulation.
While discussing funds flowing through crypto exchanges at a Press Conference at the 293rd Monetary Policy Committee (MPC) meeting, Cardoso told reporters:
“We are concerned that certain practices go on that indicate illicit flows going through a number of these entities [crypto platforms] and suspicious flows at best. “In the case of Binance, in the last one year alone, $26bn has passed through Binance Nigeria from sources and users who we cannot adequately identify.”
Now, someone familiar with the matter told the Financial Times that the authorities were demanding to see a list of Binance’s Nigerian users since its inception. FT said an adviser to the office did not immediately respond to a request for comment and Binance declined to comment. These developments are coming as Africa’s most populous country tries to rein in speculation on the naira by cracking down on cryptocurrency exchanges.
This arrest will come as a fresh blow to Binance which has faced a difficult time with regulators in the past 18 months. Last November, Binance paid $4.3bn in penalties to United States authorities after pleading guilty to criminal charges related to money laundering and violating international sanctions rules. Also, the company’s founder and former CEO, Changpeng Zhao, pleaded guilty to a criminal charge related to money laundering and resigned from his position.
Backstory of the issues with Binance in Nigeria
A development that has been making waves recently is the alleged connection between USDT trading on Binance and the fall of the Naira in Nigeria.
Last Wednesday, the Special Adviser to the President on Information and Strategy, Bayo Onanuga urged the central bank and the Economic and Financial Crimes Commission (EFCC) to clamp down on platforms like Binance and other cryptocurrency companies for alleged manipulation of the foreign exchange market.
In a statement issued on X (Twitter), Bayo said Binance blatantly sets exchange rates for Nigeria and hijacks the CBN’s role, adding that it is a platform that suffers access limitations from multiple jurisdictions, such as the US, Singapore, Canada, and the UK. According to him, crypto exchanges like Binance and Kucoin ought to be prohibited from Nigeria’s cyberspace.
With that narrative gaining steam, the Central Bank of Nigeria, in conjunction with the Nigerian Communications Commission (NCC) directed all telecommunications companies in the country to restrict access to crypto companies’ websites and applications on Wednesday On Thursday, Bayo Onanuga called an X (Twitter) user who posted about using VPNs to circumvent the ban an “economic hitman working with crypto sites to destroy our country.”
Apparently, the Nigerian authorities are making this move to avert what it sees as continuous manipulation of the FX market, as part of efforts to avert the free fall of the local currency. Just like the statement from the CBN Governor on Tuesday implies, they believe that speculators use the p2p marketplaces of crypto platforms to significantly weaken the naira. As widespread and as disturbing as this notion is, we have written an explainer on why USDT is and is not capable of influencing the rate of the dollar in Nigeria.
In the explainer, we said in the grand scheme of things, blaming Binance, specifically USDT trading, for the Naira’s fall oversimplifies a complex economic scenario. Binance operates within a global market, and the rise of the dollar against the Naira is a multifaceted issue with roots deep in economic policies, global trends, and domestic decisions.
