Nigeria Demands $10 Billion From Binance After Naira Drop
01 Mar, 2024 ● Crypto News
The cryptocurrency exchange Binance has discontinued the use of the Nigerian naira in its peer-to-peer (P2P) trading service amidst a demand from the Nigerian government for $10 billion in damages during a regulatory crackdown on the platform.
Bayo Onanuga, an adviser to President Bola Tinubu, disclosed in a BBC interview on March 1 the demand for compensation as an effort to stabilize Nigeria's currency.
Onanuga warned that Binance's operations could harm the Nigerian economy by its arbitrary setting of foreign exchange rates.
The P2P functionality, which enables direct transactions between users without an intermediary, gained popularity in Nigeria following the 2021 ban on the flourishing cryptocurrency sector by the previous administration under President Muhammadu Buhari.
With the naira experiencing a steep fall and inflation reaching a nearly 30-year peak of 29.9%, the Nigerian government shifted attention to cryptocurrency service platforms.
These platforms have played a role in setting an unofficial exchange rate for the naira.
Nigerian cryptocurrency users previously faced challenges accessing various cryptocurrency exchange sites, including Binance and OctaFX.
Subsequently, Binance imposed a cap on the sale price of Tether tokens on its P2P service, preventing sales of USDT for more than 1,802 naira per USDT, which the exchange clarified was due to an automatic system halt rather than speculative actions.
Binance has come under heightened scrutiny from Nigerian authorities, with the Central Bank of Nigeria (CBN) citing concerns over "suspicious flows" of funds through Binance Nigeria in 2023.
Olayemi Cardoso, the head of CBN, noted that Binance channeled $26 billion through Nigeria from unidentified sources and users in 2023.
Reports have also emerged that two high-ranking Binance officials have been detained in Abuja by the National Security Adviser’s office as part of efforts to regulate cryptocurrency exchanges and manage speculation surrounding the naira.
The government's hostile stance towards cryptocurrencies has been criticized by local crypto experts, who argue that Nigeria's economic issues could worsen if it continues to oppose cryptocurrencies instead of concentrating on enhancing its manufacturing and export sectors.
Sources:
https://cointelegraph.com/news/binance-drops-naira-government-scrutiny
https://www.bbc.com/pidgin/articles/c25817r8wk8o
https://twitter.com/silasadedoyin/status/1762854094807376267
