The Nigerian government is contemplating blocking the online platforms of Binance and other cryptocurrency firms to mitigate what it perceives as ongoing manipulation of the forex market and illicit fund movements, according to officials familiar with the policy discussions.
The recent unprecedented depreciation of the Nigerian currency has seen the naira plummeting to an all-time low of N1,800 to a dollar in the parallel market.
Sources within the presidency and regulatory bodies reveal that the government is considering action against Binance and other crypto firms due to reports indicating that currency speculators and money launderers exploit these platforms to carry out criminal activities. Authorities believe that these ‘criminal activities’ are significantly contributing to the devaluation of the naira.
Binance, a digital assets platform, acts as a platform for peer-to-peer transactions, allowing users to advertise their interest in buying or selling currencies of their choice.
In September 2023, Nigeria’s Securities and Exchange Commission (SEC) issued a disclaimer regarding Binance Nigeria Limited, stating that the platform was “neither registered nor regulated by the Commission,” and its operations in Nigeria were deemed illegal.
Despite the SEC’s warning, the firm continued its operations, attracting substantial patronage, especially among urban youths and suspected speculators and money launderers.
Apart from suspicions of economic sabotage, officials also express national security concerns as these platforms are frequently used by criminal groups for various illicit activities, including ransom payments.
Law enforcement sources report that digital asset platforms are routinely utilized for forex manipulation through fake transactions, artificially inflating or deflating currency values.
An insider at the Economic and Financial Crimes Commission (EFCC) involved in probing criminal complaints against digital asset platforms described the process as a “sophisticated heist against the Nigerian economy.”
According to the source, manipulators exploit the simultaneous opening of buy and sell windows for a single user, creating fake transactions that manipulate currency values and mislead the market.
A senior executive at the Central Bank of Nigeria (CBN) expressed concern over the recent bearish trend in the naira’s value against the dollar, attributing it to artificial devaluation caused by speculative activities on these platforms.
However, he noted that trading on these platforms is facilitated by money launderers and terrorist financiers, exacerbating the situation.
Binance has faced similar allegations of currency manipulation and unethical conduct in many countries, resulting in sanctions and an ongoing lawsuit in the United States.
If the Nigerian government decides to ban digital asset trading sites like Binance, it would join other countries like Malaysia, France, and Malta, which have taken similar actions.
Efforts to reach out to Mr. Mijinyawa, the Head of Strategic Communication at the Office of the National Security Adviser, for comment on the planned clampdown, were unsuccessful as he was reportedly engaged in an “important meeting.” Binance also could not be reached for comment as calls to their customer service number went unanswered.