The Nigerian government is considering blocking the online platforms of Binance and other crypto firms to avert what it considers continuous manipulation of the forex market and illicit movement of funds.
The recent unprecedented weakening of the Nigerian currency has seen the naira falling to all-time low of N1,800 to a dollar in the parallel market.
Regulatory sources say the government decided to move against Binance and other crypto firms following reports that currency speculators and money launderers were using them to execute criminal activities.
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Authorities believe the ‘criminal activities’ going on on platforms are contributing significantly to the weakening of the naira.
Binance, a digital assets platform, serves as a window for peer to peer transaction allowing users to advertise interest to sell or buy currencies of their choice.
In September 2023, Nigeria’s Securities and Exchange Commission (SEC) placed a disclaimer on Binance Nigeria Limited, saying the platform was “neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal”.
Despite the warning by the regulatory agency, the firm continued its operation, attracting huge patronage especially among urban youths and suspected speculators and money launderers.
Aside suspicions of economic sabotage, officials also speak of national security concerns as the platforms are often patronised by other criminal groups including for payment of ransom.
Law enforcement sources say the
digital asset platforms are also routinely deployed for manipulation of forex values through fake deals that serve to prop up values or cause a fall.
A source at the Economic and Financial Crimes Commission (EFCC) involved in probing criminal complaint against digital asset platforms, who was however not authorised to speak to the press, described the process as a “sophisticated heist against the Nigerian economy”.
According to her, by allowing simultaneous opening of buy and sell windows for a single user, manipulators often fake interest to sell dollars which they then buy at a speculated rate to themselves through the buy window.
“This therefore gives the dollar a fake value against the naira which then sets a frenzy
and mislead the market. This fake price is then often quoted by BDCs who raise their prices to meet the Binance benchmark even without any corresponding demand in that segment,” she said.
A senior executive at the Central Bank of Nigeria (CBN) described as “troubling” the bearish downward trade of the naira against the dollar in the last 10 days, attributing it to artificial devaluation caused by the speculative sites, as reported by Premium Times.
“Through manipulative rent seeking, Binance’s global reach results in higher USD to NGN exchange rates often being used as a benchmark for currency trading, misleadingly devaluing the Naira in global markets.”