The Nigeria government is cracking down on cryptocurrency exchanges in an effort to stabilize the volatility of the Naira and protect its value against foreign currency. Following the Naira’s floatation last June, its value plummeted to ₦1880/$ and ₦2414/£ just two weeks ago. According to reports, the federal government has detained two high-ranking executives of Binance on charges related to manipulating currency and engaging in illicit financial transactions. This action is one aspect of a larger initiative aimed at securing the stability of the foreign exchange market and safeguarding the country’s currency, the naira.
Nigerian authorities took decisive action by detaining the Binance executives who had arrived in the country for negotiations during a tumultuous period for crypto platforms like Kraken and Coinbase. The regulatory measures being implemented stem from the concerns surrounding the potential misuse of crypto for illegal purposes and its effects on the local currency, despite advice from the Nigeria Securities and Exchange Commission (NSEC). It was reported that the Binance executives are still in detention due to prolonged talks between the two sides, along with requests for transaction records and embassy assistance.
Authorities blamed Binance for the weakening of the naira.
With the current situation, the squabble between regulators and cryptocurrency platforms has reached a new level. Nigerian authorities, such as Bayo Onanuga, an advisor to President Bola Ahmed Tinubu, have blamed Binance for the weakening of the naira. The Nigerian Communications Commission has now instructed telecom companies to block residents from accessing Binance, Coinbase, and Kraken websites. Binance Nigeria was flagged by The Central Bank of Nigeria for processing $26 billion in transactions within a year, sparking worries about potential illicit financial activities.
Yemi Cardoso, Governor of the Central Bank of Nigeria, unveiled a joint effort by the country’s anti-corruption agency, the police, and the national security advisor to investigate. They are now looking to compile a detailed roster of all Binance account holders in Nigeria. The focus of the operation is on Binance’s peer-to-peer trading process, which enables direct transactions with no middlemen. There are worries over individuals selling USDT at high prices in Nigeria, affecting the value of the naira. In response, Binance took action to deactivate its P2P feature, thereby prohibiting Nigerian users from engaging in transactions with one another.
Outlook for the crypto industry remains undetermined.
Speculation has also arisen about the possible disappearance of the USDT/Naira trading function from the platform, adding to the uncertainty surrounding crypto trading in Nigeria. With ongoing inquiries and increasing regulatory scrutiny, the outlook for the industry remains undetermined. The situation mirrors worldwide discussions on cryptocurrency regulations and their effects on the financial system. Nigeria’s once-booming crypto scene is now teetering on the brink, stuck in a standoff between regulators and key players in the field.
In September of 2023, the Nigerian Securities and Exchange Commission issued a statement regarding Binance Nigeria Limited, stating that the platform was operating illegally in Nigeria as it was not registered or regulated by the Commission. An official announcement released by the company last week revealed that it will be banning users who engage in manipulative behaviour on its platform. We are collaborating closely with local authorities, legislators, and regulators to address non-compliance, the platform emphasized.
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It further stated that it is implementing strict measures such as limiting the number of ads, filtering out harmful advertisements, increasing merchant deposits for ad posting, and implementing procedures to combat market manipulation. Despite the ongoing crackdown by the Nigerian government, the crypto exchange platform has chosen to remain silent on the matter. This move comes months after Binance admitted guilt and agreed to a $4.3 billion settlement for charges of criminal money laundering brought against them by the U.S. Department of Justice.
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