Binance, a leading cryptocurrency trading platform, has made the decision to remove the Nigerian currency, the naira, from its peer-to-peer (P2P) service amidst a crackdown by the Nigerian government on cryptocurrency exchanges. The move comes as the government seeks $10 billion in damages to address concerns about stabilizing the local currency, according to Bayo Onanuga, a special adviser to President Bola Tinubu, in an interview with the BBC on March 1. Onanuga emphasized the potential economic ramifications of Binance's actions, suggesting that the platform's arbitrary fixing of foreign exchange rates could undermine Nigeria's economy if left unchecked.
P2P functionality, which facilitates direct transactions between buyers and sellers without intermediaries, has gained significant traction in Nigeria since the government's ban on the country's flourishing cryptocurrency industry in 2021 under former President Muhammadu Buhari's administration. With the naira experiencing rapid depreciation and inflation rates soaring to 29.9%, the government has intensified its focus on platforms offering cryptocurrency services, viewing them as influential players in shaping the informal value of the naira.
Reports have surfaced of Nigerian cryptocurrency users encountering difficulties accessing various cryptocurrency trading websites, including Binance and OctaFX. Binance notably implemented restrictions on Tether's selling price on its P2P platform, capping the number of tokens available at prices above 1,802 naira per USDT. While some speculated that this move was a deliberate effort by Binance to control the market, the exchange clarified that the price peg was the result of an automatic system pause rather than intentional manipulation.
The increased scrutiny on Binance in Nigeria comes in the wake of concerns raised by the Central Bank of Nigeria (CBN) regarding "suspicious financial flows" through Binance Nigeria in 2023. CBN head Olayemi Cardoso revealed that $26 billion had flowed through Binance to Nigeria from unidentified sources and users during that period. Additionally, reports have emerged of the Office of the National Security Adviser detaining two senior Binance officials in Abuja as part of the government's efforts to curb speculation surrounding the naira.
Despite the government's crackdown on cryptocurrency exchanges, local cryptocurrency analysts have expressed dismay over what they perceive as an unfriendly approach to cryptocurrencies. They argue that unless the government shifts its focus towards addressing fundamental issues such as manufacturing and exporting, the country's financial challenges are likely to persist regardless of regulatory measures targeting cryptocurrencies.
