Crypto Crackdown in Nigeria: Binance and Others Face Billions in Fines for Alleged Currency Manipulation

Nigeria’s Securities and Exchange Commission (SEC) is reportedly preparing to slap hefty fines on Binance and other cryptocurrency firms operating in the country, following allegations of currency manipulation.

The crackdown comes after a series of events that have shaken the Nigerian crypto market, including the detention of Binance executives and the suspension of trading on several platforms.

According to reports, the SEC has been investigating claims that these crypto companies have engaged in currency manipulations against the Naira without underlying transactions.

This has contributed to the current foreign exchange liquidity crisis in the country.

The situation has been exacerbated by the fact that Binance has previously been sanctioned by the US Government for currency manipulation.

In response to the ongoing investigation, Binance and other platforms have suspended their operations and barred users from buying the USDT and USDC stablecoins with Naira.

This came after the Central Bank of Nigeria (CBN) initiated fresh investigations in collaboration with security agencies.

The situation escalated when two Binance executives, an American and a British-Pakistani, were reportedly detained by security operatives following an invitation for a meeting with officials from the Office of the National Security Adviser (NSA).

The executives were arrested and their passports seized, with the federal government demanding that they provide data about their naira operations over the past seven years.

Furthermore, the government has requested that the Binance executives delete all naira information from their platform, a request that they have reportedly refused.

It is believed that a court warrant has been obtained to detain the executives for at least 12 days to facilitate further investigations into their suspected malicious activities in the country.

The crackdown on Binance and other crypto platforms comes in the wake of ongoing investigations into the country’s foreign exchange market, which has reportedly suffered years of distortions, manipulations, and speculations, leading to the weakening of the Naira against major currencies, particularly the US dollar.

CBN Governor, Mr. Olayemi Cardoso, justified the bank’s recent actions, citing Binance’s platform as allowing its users to engage in speculative activities against the Naira.

He revealed that unidentified users accessed $26 billion on the platform in 2023 alone, with all the attendant implications for monetary policy, including the potential to fuel inflation and further weaken the Naira.

Cardoso also highlighted the presence of illicit inflows and suspicious transactions, emphasizing that the CBN has a responsibility to protect Nigerians from the disruptive activities of such crypto platforms.

The CBN is collaborating with various agencies, including the Economic and Financial Crimes Commission (EFCC), the police, and the Office of the NSA, to crack down on these alleged economic saboteurs.

While the crackdown on cryptocurrency platforms in Nigeria is aimed at protecting the country’s financial stability, analysts warn that the move could send mixed signals to foreign investors and further damage their confidence in the economy.

They argue that the operation should have been carried out discreetly without public attention, as the current approach may cause investors to flee the country.

The ongoing crackdown on Binance and other cryptocurrency firms in Nigeria highlights the importance of adhering to regulations and ensuring the integrity of the financial system.

However, the manner in which the situation is being handled may have unintended consequences for the country’s economy and its reputation in the global market.