Nigeria Directs Cryptocurrency Firm Binance to Settle $10 Billion

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The Nigerian government has announced its demand for nearly $10 billion in compensation from the cryptocurrency firm, Binance. Allegations suggest that Binance engaged in manipulating foreign exchange rates, leading to currency speculation and rate-fixing, which subsequently contributed to the devaluation of the naira by almost 70% in recent months.

Earlier this week, Nigerian authorities arrested two Binance executives. Despite repeated requests, Binance has not responded to the BBC’s inquiries for comment.

Nigeria boasts the largest economy in Africa and ranks among the world’s biggest cryptocurrency markets. According to Nigeria’s central bank governor, Olayemi Cardoso, Binance Nigeria allegedly facilitated the movement of $26 billion worth of untraceable funds, a claim of significant concern.

Tilewa Adebajo of CFG Advisory commented to the BBC, describing the allegations as substantial, considering the massive sum involved, which surpasses Nigeria’s annual diaspora remittances of $24 billion.

Cryptocurrency transactions in Nigeria accounted for about 12% of the country’s total income or GDP in the year leading up to June 2023, as reported by Reuters. While cryptocurrencies are not illegal in Nigeria, firms are required to register to operate. A special adviser to Nigeria’s president informed the BBC that Binance failed to comply with this regulation.

President Bola Tinubu, upon taking office, abolished the policy of pegging the naira to the dollar, allowing market forces to determine exchange rates. However, special advisor Bayo Onanuga emphasized that the recent naira devaluation was not a result of normal market activity but was allegedly influenced by activities on the Binance platform.

Binance is reportedly one of the most popular cryptocurrency platforms in Nigeria. The suspension of Binance and several other cryptocurrency firms in recent weeks, including Coinbase, Kraken, Forextime, OctaFX, Crypto, and FXTM, has frustrated Nigerian users, aimed at halting the naira’s decline.

The Nigerian government also cited concerns that cryptocurrency is used for money laundering and terrorist financing. The anonymity and privacy features inherent in cryptocurrency transactions attract individuals, including those with illicit intentions, according to a recent report by the Nigerian Financial Intelligence Unit.

Central bank governor Mr. Cardoso highlighted the detection of “illicit flows” on some cryptocurrency platforms in Nigeria, without naming specific firms as culprits.

To curb foreign currency trading, Nigeria has shuttered thousands of bureaux de change. The country’s central bank faces pressure to stabilize the national currency, the naira, which currently exchanges at 1,595 naira to US$1, compared to about 460 a year ago.