News
Binance: Nigeria Orders Cryptocurrency Firm to Pay $10 Billion
- By Nkechi Ogbonna and Natasha Booty
- BBC News, Lagos and London
March 1, 2024
Image source, Getty Images
Image caption, Binance is considered one of the most popular cryptocurrency platforms in Nigeria
The Nigerian government says it has sought almost $10 billion (£8 billion) in compensation from cryptocurrency firm Binance.
According to the firm, Binance has manipulated exchange rates through currency speculation and rate fixing, which has seen the naira lose almost 70% of its value in recent months.
Two Binance executives were arrested in Nigeria earlier this week.
Binance did not respond to requests for comment from the BBC.
Nigeria is Africa’s largest economy and also one of the largest cryptocurrency markets in the world.
On Tuesday, Nigeria’s central bank governor Olayemi Cardoso said Binance Nigeria moved untraceable funds worth $26 billion.
“These accusations are serious,” Tilewa Adebajo CFG Advisory tells the BBC. “This is a huge sum, even more than the annual remittances from the Nigerian diaspora which amount to $24 billion.”
“The government must have done its duty, hence the charges.”
Cryptocurrency transactions equivalent to around 12% of Nigeria’s total income, or GDP, were made in the year to June 2023, according to Reuters news agency.
Cryptocurrencies are not illegal in Nigeria, but companies must register to operate there, the government says. A special advisor to Nigeria’s president told the BBC that Binance failed to do so.
After taking office last year, President Bola Tinubu abandoned the policy of pegging the naira to the dollar, allowing traders to buy and sell the currency at market-determined rates. But special adviser Bayo Onanuga said the recent collapse was not the result of normal activity.
“All of a sudden the exchange rate skyrocketed… and it was caused by people on the Binance platform,” he told the BBC Newsday programme.
“The government couldn’t just fold its hands and let this thing continue.”
Binance is considered one of the most popular cryptocurrency platforms in the country.
To the frustration of Nigerian users, Binance and several other cryptocurrency companies have been suspended in the country in recent weeks, including Coinbase, Kraken, Forextime, OctaFX, Crypto and FXTM, in a bid to stop the naira’s slide.
In addition to the collapse of the naira, the government also claims that the cryptocurrency is being used for money laundering and financing terrorism.
“The anonymity and privacy inherent in the cryptocurrency system is what attracts individuals, especially those with illicit intentions, to its use,” says a recent report from the Nigerian Financial Intelligence Unit.
Central bank governor Cardoso said on Tuesday that “illicit flows” have been detected on some cryptocurrency platforms in Nigeria. No specific company was named as the culprit.
In another measure intended to curb foreign currency trading, Nigeria has closed thousands of exchange offices.
Nigeria’s central bank has been under pressure to stabilize the national currency, the naira, which currently trades at 1,595 naira per US dollar, up from around 460 a year ago.
The collapse of the naira has worsened the cost of living crisis. High prices for food and raw materials, including fuel and transportation, have caused prices to rise has led to protests in recent weeks.