The Nigerian government has leveled a staggering $10 billion demand against crypto giant Binance, accusing the firm of engaging in currency speculation and rate-fixing activities that contributed to the naira’s dramatic depreciation. Over recent months, the Nigerian currency has plummeted by nearly 70% in value, a situation the government attributes to manipulative financial practices.
This week saw the arrest of two Binance executives in Nigeria, signaling a serious escalation in the confrontation between the cryptocurrency firm and Africa’s largest economy, which also stands as a global leader in cryptocurrency adoption.
Despite repeated attempts, Binance has remained silent on the matter, offering no comments in response to inquiries from the BBC.
The accusations come from Nigeria’s central bank governor, Olayemi Cardoso, who alleged that Binance Nigeria was involved in the movement of $26 billion in funds that cannot be traced. The magnitude of these allegations is underscored by Tilewa Adebajo of CFG Advisory, who noted to the BBC that the sum involved surpasses Nigeria’s annual diaspora remittances, which total $24 billion. “The government must have done their homework, hence the allegations,” Adebajo remarked.
According to data cited by Reuters, cryptocurrency transactions in Nigeria for the year ending in June 2023 accounted for approximately 12% of the nation’s GDP. While cryptocurrencies are not illegal in Nigeria, regulatory requirements mandate that firms must be registered to operate, a condition Binance reportedly failed to meet.
The naira’s freefall occurred after President Bola Tinubu abolished the policy of fixing the naira to the dollar, adopting a market-driven exchange rate instead. However, Bayo Onanuga, a special adviser to the president, attributed the naira’s collapse not to market dynamics but to manipulative trading on the Binance platform.
The suspension of Binance and several other cryptocurrency firms, including Coinbase and Kraken, is part of Nigeria’s broader effort to stabilize the naira and address concerns over the use of cryptocurrencies in money laundering and financing terrorism. The Nigerian government and its financial intelligence unit have highlighted the risks posed by the anonymity provided by cryptocurrencies.
In a bid to control foreign currency trading further, Nigeria has also shuttered thousands of exchange bureaus. Amid these tumultuous economic conditions, the central bank faces mounting pressure to stabilize the naira, which has seen its value against the US dollar more than triple in just a year.
