The Nigerian government has demanded that the world’s largest cryptocurrency exchange, Binance, pay $10 billion in damages for contributing to the country’s economic crisis.
During an interview with local media BBC, Bayo Onanuga, special adviser to the Nigerian president on information and strategy, said the government is aware of the effects of Binance’s operations in the country.
Binance Contributing to Nigeria’s Forex Crisis
Onanuga explained that Binance fixed an illegal foreign exchange rate for Nigeria, resulting in massive losses and significant naira (NGN) depreciation.
While the naira crashed against the United States dollar at high speed in mid-February, Binance set a price limit of 1,802 NGN for each Tether (USDT) traded on its Nigerian peer-to-peer (P2P) platform to hedge against the heightened inflation. The exchange eventually disabled the sell option for the stablecoin temporarily, and at the time of writing, the P2P feature had gone offline for the NGN.
The NGN/USDT price cap raised questions about Binance’s compliance with the Nigerian government to help save the free-falling NGN. However, Onanuga has stated that the Central Bank of Nigeria (CBN) is the only entity with the authority to fix foreign exchange rates. Binance’s figures surpassed the CBN’s budget of 800 NGN per USD.
According to the president’s special adviser, Binance harbors people fixing rates that drastically affect the NGN at a time when the government is trying to stabilize the economy. The exchange is causing an economic disruption; hence, it must pay for damages.
Binance Nigeria Executives Arrested
In addition, Onanuga revealed that Binance and other crypto exchanges are not registered according to the laws of Nigeria and are, therefore, not authorized to operate in the country. Although the CBN has lifted the crypto ban, the platforms still have to register with the Nigerian Securities and Exchange Commission (SEC) to offer their services freely.
Earlier this week, CBN governor Olayemi Cardoso announced during a meeting that the Binance Nigeria P2P platform had facilitated more than $26 billion worth of crypto transactions in a year, and most of the traders were users without proper identity verification.
Meanwhile, Nigerian law enforcement agencies have arrested two foreign Binance executives for questioning over allegations of money laundering and terrorist financing. Onanuga said they are cooperating with the government by providing requested information. It remains unclear how long the investigation will take.