Onanuga Warns: If Unchecked, Binance Could Devastate Nigeria’s Economy
The crackdown on cryptocurrency exchanges in Nigeria has escalated with the detention of two Binance executives. The Nigerian authorities have accused Binance of currency manipulation and illicit fund movements, as part of their efforts to stabilize the foreign exchange market and protect the local currency, the naira.
The media outlet Premium Times reported that the Binance executives were detained after arriving in Nigeria to negotiate amid a wider crackdown on crypto platforms, including Binance, Kraken, and Coinbase. Concerns about the use of these platforms for criminal activities and their impact on the naira have prompted regulatory action, despite warnings from agencies like the Nigeria Securities and Exchange Commission.
Negotiations between Binance and Nigerian officials reached a deadlock, with demands for transaction data and embassy involvement. As a result, the executives were detained for at least twelve days.
Before the detention, Nigerian officials, including Bayo Onanuga, a special adviser to President Bola Ahmed Tinubu, blamed Binance for the rapid decline of the naira. Following this, the Nigerian Communications Commission directed telecom companies to restrict access to the websites of Binance, Coinbase, and Kraken for residents.
The Central Bank of Nigeria has also raised concerns about illicit financial activities, claiming that $26 billion has flowed through Binance Nigeria in a year. The Central Bank of Nigeria Governor, Olayemi Cardoso, stated that Nigeria’s anti-corruption wing, along with the police and the national security advisor’s office, is collaborating to investigate cryptocurrency exchanges. Authorities are now requesting a list of all Binance users in Nigeria since the company started operating there.
The root cause of this crackdown is Binance’s peer-to-peer (P2P) trading method, which allows individuals to trade directly on the platform without intermediaries. However, there have been instances where a type of currency called USDT has been sold at higher prices than usual in Nigeria. The government believes that this is negatively impacting the naira, leading them to block Binance’s website and others to restrict local transactions.
In response to the government’s crackdown, Binance has disabled its P2P feature, preventing users in Nigeria from transacting with each other. There are also rumors suggesting that Binance may have removed the USDT/naira trading option.
The future of crypto trading in Nigeria is uncertain, as investigations and regulatory pressure continue. This situation reflects the wider global debates on crypto regulations and financial stability.