Binance, one of the world's largest cryptocurrency exchanges, is under increased scrutiny in Nigeria due to concerns over "suspicious financial flows" through its Nigerian arm in 2023, as revealed by the governor of the Central Bank of Nigeria (CBN) in a statement to reporters on February 27. The country's Securities and Exchange Commission, along with other government agencies, are actively investigating the matter, casting suspicions on various cryptocurrency exchanges operating in Nigeria.
CBN Governor Olayemi Cardoso expressed concerns about the practices observed within cryptocurrency exchanges in Nigeria, citing instances of illicit financial flows and questionable financial activities. According to Cardoso, an alarming $26 billion passed through Nigeria via Binance in the past year alone, originating from sources and users that are difficult to identify accurately. This has prompted collaborative efforts among different agencies, including the Economic and Financial Crimes Commission (EFCC), the police, and the National Security Adviser (NSA) office, to address these issues.
Recent reports indicate that two Binance executives, both foreign nationals from the United States and the United Kingdom, had their passports confiscated after being detained by the NSA office in Abuja, the capital of Nigeria. Additionally, internet access to Binance and other cryptocurrency exchanges was blocked following claims by Nigeria’s presidential adviser Bayo Onanuga, who accused these platforms of currency manipulation. In response to regulatory concerns, Binance had already implemented restrictions on Tether trading in Nigeria on February 20.
Further exacerbating the situation, a report reveals that several cryptocurrency exchanges, including Binance, Forextime, OctaFX, and others, were blocked on February 27. This crackdown coincided with a record low for the Nigerian naira against the US dollar. While the Central Bank of Nigeria had lifted a two-year ban on banks engaging in cryptocurrency trading in December, the institution simultaneously issued guidelines for regulating virtual asset service providers in an attempt to address the growing concerns surrounding cryptocurrency activities.
Interestingly, Nigeria was the second country to introduce a central bank digital currency in 2022. Additionally, the African Stablecoin Alliance launched its cNGN stablecoin, pegged to the Nigerian naira, in the CBN regulatory sandbox earlier this month. These developments reflect Nigeria's evolving stance on digital currencies and efforts to navigate the regulatory landscape amidst the increasing prominence of cryptocurrencies in the country's financial ecosystem.
