The Nigerian government is intensifying its regulatory efforts on cryptocurrency exchanges in an attempt to prevent speculation on the country’s currency, the Naira. After banning exchanges such as Binance, Coinbase, and Kraken last week, two executives from Binance were reportedly detained and had their passports confiscated.
Since assuming office in May of last year, Nigerian President Bola Tinubu has been trying to attract foreign investment through a series of market reforms to revive the country’s struggling economy. This includes the removal of fixed exchange rates and the implementation of a floating exchange rate system. The Nigerian Central Bank has allowed the Naira to significantly depreciate twice in the past eight months.
Interestingly, as the Naira depreciated and inflation rates reached a three-decade high, cryptocurrency exchange websites have become an alternative option for trading and establishing unofficial Naira exchange rates.
However, in order to combat exchange rate speculation, the Nigerian Communications Commission ordered telecom companies on the 21st to block consumer access to cryptocurrency exchange websites such as Binance, Coinbase, and Kraken.
Bayo Onanuga, a special advisor to Bola Tinubu, accused Binance of openly setting exchange rates for the Naira and manipulating the country’s currency, urging Nigerian authorities to take action against these platforms attempting to manipulate the national currency. He also called for a ban on cryptocurrencies, warning of continued depreciation of the Naira if not implemented.
According to Olayemi Cardoso, the Nigerian police and national security advisor are coordinating an investigation into cryptocurrency exchanges. Authorities have requested to see the user lists of Binance Nigeria since its establishment.
Furthermore, according to the Financial Times, after Nigeria decided to ban several cryptocurrency exchange websites last week, executives from Binance who traveled to Nigeria were detained by the country’s Office of the National Security Advisor and had their passports confiscated. Following the detention of these executives, Binance also temporarily suspended trading pairs of Bitcoin/Naira and USDT/Naira.
Olayemi Cardoso, Governor of the Nigerian Central Bank, expressed concerns that illegal funds are circulating through numerous cryptocurrency trading platforms. For Binance alone, up to $26 billion of untraceable funds flowed through its Nigerian platform in the past year.
Binance has recently faced regulatory obstacles in multiple countries. After reaching a settlement agreement with the US Department of Justice and other regulatory authorities in November of last year, the court officially approved the agreement on the 23rd, requiring Binance to pay a $4.3 billion fine. However, the lawsuit between Binance and the Securities and Exchange Commission is still ongoing.
Additionally, Binance has been affected by new regulations in the UK. After temporarily suspending registration for new users and ceasing to offer new products or services in October of last year, Binance sought to re-enter the UK market this year. However, it was reported earlier this month that potential local partners in the UK have refused to cooperate with Binance due to opposition from regulatory authorities.