- The crackdown on Binance in Nigeria is fast escalating.
- Regulators in the country are seeking a jaw-dropping sum in penalties.
- The exchange stands accused of market manipulation.
Over the past week, the activities of crypto exchanges, particularly Binance, have come under significant scrutiny from Nigerian regulators.
In addition to blocking the exchange’s website, forcing it to shut down its naira p2p marketplace, and detaining two of its executives in a hunt for the exchange’s customer details and transaction data, an aide to Nigeria’s president has disclosed that the firm is also likely to be slapped with a hefty fine as part of a widening regulatory action.
Binance on the Hook for $10B?
In an interview with the B.B.C. on Friday, March 1, an aide to the Nigerian president on information and strategy, Bayo Onanuga, asserted that the country has demanded $10 billion in penalties from Binance.
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According to Onanuga, the firm had profited significantly from alleged illegal trading activities on its platform, while Nigeria suffered substantial losses.
Meanwhile, the presidential aide claimed that Binance was already cooperating with authorities. Onanuga pointed to the exchange’s decision to shut down its p2p platform for Nigerians as evidence of this cooperation.
During the Friday interview, Onanuga stressed that Binance and other crypto exchanges had failed to follow proper registration channels before offering services to Nigerians.
Background: Is Binance To Blame for the Naira’s Declining Value Against the Dollar?
With the naira declining to record lows of 1,900 against the dollar over the past week, crypto exchanges, particularly Binance, have come into the crosshairs of Nigerian authorities, who have accused them of facilitating the devaluation of the currency.
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According to regulators, bad actors wash-traded the USDT-NGN pair on Binance’s p2p marketplace through fake buy and sell orders to create a market-wide effect that crashed the naira for personal gain.
In line with the alleged market manipulation, authorities argued that clamping down on Binance was necessary to preserve the economy.
Meanwhile, Nigerian regulators have also accused Binance of serving as a channel for illicit fund flows. In a statement to the press on Tuesday, February 27, the country’s central bank chief, Olayemi Cardoso, asserted that about $26 billion passed through Binance in 2023 alone from inadequately identified sources.
According to a Thursday, February 29 report from a local news outlet, Channels, authorities are also probing the exchange for facilitating terrorism financing and other criminal activities.
Binance has yet to respond to requests for comment on the situation.
On the Flipside
- Despite the claims by Nigerian authorities that Binance is responsible for the devaluation of the naira, a prevalence of corruption, worsening security challenges, and an erratic policy landscape have long been a deterrent to foreign direct investment, driving up the scarcity of the dollar and its value against the naira.
- Outside Nigeria, Binance also faces a $4.3 billion fine in the U.S. for money laundering charges.
Why This Matters
Amid mounting global regulatory challenges, Binance, the world’s largest exchange, has seen its market share tank in the past year. The recent debacle in Nigeria, the country with the largest crypto p2p marketplace in the world, promises to serve as another blow to the industry giant.
Read this for a deep dive into Binance’s recent woes in Nigeria:
Unraveling Binance’s Nigeria Woes as Govt Hunts User Info
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