Binance, the popular cryptocurrency trading platform, has removed the Nigerian currency, the naira, from its peer-to-peer (P2P) service. This decision comes as the Nigerian government demands $10 billion in compensation and cracks down on the crypto exchange.
Bayo Onanuga, President Bola Tinubu’s special adviser, revealed this development in a recent BBC interview. He explained that the compensation demand is part of the government’s efforts to stabilize the local currency. Onanuga expressed concerns that Binance’s arbitrary fixing of foreign exchange rates could have a detrimental impact on the Nigerian economy if left unchecked.
The P2P feature on Binance allows users to trade directly with each other without involving a third party. This feature gained popularity in Nigeria in 2021 after the government banned the thriving crypto industry during former President Muhammadu Buhari’s administration.
Due to the rapid decline of the naira and the resulting high inflation rate of 29.9%, the government has shifted its focus to platforms that provide cryptocurrency services. These platforms have become known for trading and establishing an informal value for the naira.
Crypto users in Nigeria have reported difficulties accessing various crypto exchange websites, including Binance and OctaFX. Binance later implemented a limit on the selling price of Tether (USDT) tokens on its P2P platform, preventing traders from selling USDT above 1,802 naira per USDT. The exchange clarified that this price peg was due to an automatic system pause, dispelling speculation from the local crypto community.
Binance is now facing increased scrutiny in Nigeria, with the Central Bank of Nigeria (CBN) expressing concerns about suspicious fund flows through Binance Nigeria in 2023. The CBN’s head, Olayemi Cardoso, highlighted that $26 billion had passed through Nigeria via Binance in 2023 from unidentified sources and users. There are also reports that two senior Binance officials have been detained in Abuja by the National Security Adviser’s office as the government cracks down on cryptocurrency exchanges to address concerns about the naira’s speculation.
Local crypto analysts have expressed disappointment in the government’s unfriendly stance towards cryptocurrencies in resolving the nation’s foreign exchange challenges. They argue that if the government continues to antagonize cryptocurrencies and neglect manufacturing and exporting, Nigeria’s financial problems will persist.
Cointelegraph has reached out to Binance for comment on the situation.
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