Binance And Other Crypto Firms Face Possible Ban In Nigeria Over Forex Crisis

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Nigerian officials close to the matter have discovered that the country’s government may soon block Binance and other crypto firms on online platforms due to their involvement in forex manipulation and funds embezzlement, according to PREMIUM TIMES. The naira has plummeted irritatingly low as it hit an all-time lowest of N1,800/$ in the parallel market,

According to presidency and regulatory sources, the government decided to act on Binance, among other crypto firms, after hearing reports that they were being abused by speculators of currency as well as criminals. It is believed that activities on these platforms labeled ‘criminal activities’ are largely responsible for naira depreciation.

In September 2023, the Securities and Exchange Commission (SEC) of Nigeria issued a disclaimer about Binance Nigeria Limited, stating that it is “neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal”. However, the company continued to operate and gained a significant following, particularly within cities, among young people and alleged gamblers as well as money launderers.

Binance Poses Security And Economic Risks

In addition to doubting economic sabotage, officials are worried about the national security implications of these platforms which are often used for ransom payments by other criminal groups. Law enforcement sources said that digital asset platforms are equally frequently employed to manipulate forex values through fictitious deals that raise or lower rates.

The source who spoke without permission at the Economic and Financial Crimes Commission (EFCC) described it as an “advanced raid on Nigeria’s economy.” She said that manipulators often open both buy and sell windows for one user, thereby creating a false demand for dollars, which they buy to themselves via the buying window at a speculated rate.

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.

CBN Troubled By Naira’s Downward Trend

The naira has gone down in relation to the dollar, a senior executive at CBN said during this month. He added that this was troubling since it had been caused by artificial devaluation, which was a result of speculative sites. He further stated that CBN, in collaboration with other relevant agencies, was working on checking the activities of Binance and other crypto firms so as to protect the Naira from further falling.

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, he said.

Also, he warned Nigerians against the dangers of engaging with crypto firms and advised them to report any suspicious transactions to the authorities.

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