In a significant turn of events, two senior executives from Binance, the world’s largest cryptocurrency exchange, have been detained in Nigeria.
This development comes in the wake of Nigeria’s recent decision to ban several cryptocurrency trading websites.
As reported by the Financial Times, the executives flew to Nigeria only to find themselves detained by the office of Nigeria’s national security adviser, who also seized their passports.
Additionally, Binance’s peer-to-peer (P2P) marketplace in Nigeria has been deactivated, and the NGN trading pair on the exchange has been disabled.
Central Bank of Nigeria’s Involvement:
This development follows statements from the Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, who expressed concerns about illicit financial flows through cryptocurrency platforms.
Governor Cardoso, collaborating with the Economic and Financial Crimes Commission (EFCC) and the Police, aims to “protect Nigerians” against market manipulation.
The CBN Governor specifically pointed out that $26 billion had passed through Binance Nigeria in the last year from unidentified sources and users.
Authorities’ Demands and Binance’s Response:
Authorities are reportedly seeking a list of Binance’s Nigerian users since its inception, further intensifying the scrutiny.
However, both the national security adviser’s office and Binance have refrained from immediate comments on these demands.
The situation reflects the Nigerian government’s broader attempt to regulate and control cryptocurrency exchanges to curb speculation on the national currency, the naira.
Binance’s Regulatory Challenges:
This recent arrest compounds the regulatory challenges Binance has faced globally in the past 18 months.
In November of the previous year, Binance paid $4.3 billion in penalties to U.S. authorities, pleading guilty to charges related to money laundering and violating international sanctions rules.
The company’s founder and former CEO, Changpeng Zhao, also pleaded guilty to a criminal charge related to money laundering and resigned from his position.
Allegations of FX Market Manipulation and Naira’s Fall:
The issues with Binance in Nigeria have gained attention due to the alleged connection between USDT trading on the platform and the fall of the Naira.
There have been calls from Nigerian authorities to clamp down on platforms like Binance, accusing them of manipulating the foreign exchange market.
The Special Adviser to the President on Information and Strategy, Bayo Onanuga, highlighted Binance’s influence on exchange rates for Nigeria and urged regulatory action against the platform.
Government’s Measures and Controversies:
In response to the perceived manipulation, the Central Bank of Nigeria, in collaboration with the Nigerian Communications Commission, directed telecommunications companies to restrict access to cryptocurrency companies’ websites and applications.
This move has sparked controversies, with Onanuga referring to users circumventing the ban through VPNs as “economic hitmen working with crypto sites to destroy our country.”
Complex Economic Scenario and Explainer on USDT Trading:
Amidst the allegations and regulatory actions, experts argue that blaming Binance, particularly USDT trading, oversimplifies a complex economic scenario.
Binance operates in a global market, and the factors influencing the Naira’s fall are multifaceted, involving economic policies, global trends, and domestic decisions.
An explainer has been provided to shed light on why USDT trading on Binance’s P2P platform may not be the sole cause of the Naira’s depreciation.
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