Breaking: Binance fined $10 billion

On March 1, 2024, according to the BBC report, the Nigerian government required Binance to pay at least US$10 billion in compensation.

The request comes against the backdrop of Nigeria’s crackdown on cryptocurrency exchanges and the devaluation of the country’s currency.

Nigeria accuses Binance of profiting from “illegal trading” in the country. Binance is currently under investigation in Nigeria, and Binance executives were detained in Nigeria earlier this week.

On the same day, crypto trading platform Binance has removed the Nigerian currency Naira from its peer-to-peer (P2P) functionality. Binance users in Nigeria took to social platform X to complain and express concerns about its development.

Binance delisted the naira from its P2P market as Nigerian authorities claimed that the platform caused the naira to devalue. Bayo Onanuga, advisor to the Nigerian President, previously said that if Binance is not stopped, it will destroy the Nigerian economy because of the arbitrary fixing of foreign exchange rates.

Due to the rapid decline of the naira and the resulting nearly 30-year high inflation of 29.9%, the country’s government shifted its focus to offering cryptocurrencies These sites serve as a platform for transactions and establish the informal value of the naira.

Crypto users in Nigeria had earlier reported difficulty accessing crypto exchange websites, including Binance, OctaFX, and others. A few days later, Binance placed a limit on the selling price of USDT on the P2P platform, preventing traders from selling USDT for more than 1,802 naira per USDT.

Attempt to ban

May 1, 2023 According to Bloomberg, Abdulkadir Abbas, director of securities and investment services at the Nigeria Securities and Exchange Commission, said in an interview that the agency is considering allowing the issuance of tokens backed by assets such as equity and debt on licensed digital exchanges, but not “cryptocurrencies.”

On June 10, 2023, the Nigeria Securities and Exchange Commission (SEC) officially announced that it noticed a website operated by Binance Nigeria Limited and that the company was not registered. It is not regulated by the Commission and therefore its operations in Nigeria are illegal.

Any member of the investing public dealing with this entity does so at his or her own risk. The notice hereby instructs Binance Nigeria Limited to immediately stop soliciting Nigerian investors in any form.

Subsequently, on July 31, 2023, the Nigerian Securities Regulatory Authority issued another warning, reiterating that Binance’s activities in Nigeria are neither registered nor regulated by the Commission, and therefore its operations in Nigeria are Unlawful.

At the same time, the supervision also pointed out that any member of the investing public who deals with this entity and conducts such solicitations does so at his or her own risk. The notice reiterates that all platform providers engaging in such solicitation should immediately cease soliciting Nigerian investors in any form.

On August 9, 2023, the Association of Currency Exchange Operators of Nigeria (ABCON) called on the federal government to ban Binance from operating in the country to strengthen Naira exchange rate. The association previously identified Binance as one of the main factors exerting pressure on the naira exchange rate.

On January 3, 2024, the Central Bank of Nigeria issued the first guidelines for banks to open cryptocurrency accounts, while retaining a ban on banks opening cryptocurrency accounts. Prohibition on holding or trading virtual assets in one’s own name.

The initiative, detailed on the central bank’s website, aims to regulate virtual asset service providers in response to global trends and the surge in cryptocurrency adoption in Nigeria. It is worth noting that these accounts are limited to naira-based transactions, cash withdrawals are not possible, and the frequency of withdrawals is limited.

Officially banned

February 2024 On the 22nd, the Nigerian government has instructed its telecommunications companies to block access to cryptocurrency exchanges including Binance, OctaFX and Coinbase, reflecting the global regulatory challenges faced by digital asset platforms.

The move comes months after the Central Bank of Nigeria lifted a ban on crypto trading in December 2023, showing the regulatory environment for digital assets in Nigeria of instability.

Later, Nigeria’s Central Bank Governor Olayemi Cardoso said that untraceable funds worth $26 billion flowed through Binance Nigeria last year. Nigeria is facing a foreign exchange crisis and is looking for ways to limit capital outflows as the local currency, the naira, hit a record low on Wednesday. In addition to measures such as imposing taxes on foreign workers, renewed calls to restrict cryptocurrencies in the country have made headlines recently, with reports of local users blocking access to certain crypto exchanges, including Binance.

Last year, the country’s securities regulator warned that the activities of Binance and an entity called Binance Nigeria Limited were illegal.

According to local news website Nairametrics, the Central Bank of Nigeria is working with various government agencies and the police to further investigate these financial flows.

In addition, according to the Financial Times, two Binance executives were detained in Nigeria, where people familiar with the matter revealed that Nigeria decided to ban multiple platforms last week. After opening a cryptocurrency trading website, the executives flew to Nigeria, but they were detained by the country's national security adviser's office and their passports were confiscated.

Write at the end

It can be said that Binance is one of the largest cryptocurrency exchanges in the world, but in Nigeria, it has encountered unprecedented difficulties.

Since March 1, 2024, the Nigerian government has taken a series of tough measures against Binance, including requiring it to pay at least US$10 billion in damages, accusing it of profiting from "illegal transactions" in the country, as well as blocking its website and services in the country.

Nigeria is Africa’s largest economy and one of the countries with the highest cryptocurrency usage in the world. However, the country's currency, the naira, has been falling over the past few years, leading to soaring inflation and foreign currency shortages.

For Nigerian authorities, cryptocurrency exchanges are one of the main reasons for the devaluation of the naira, as they provide a way around the official exchange rate while also Threats to the country’s financial stability and security.