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Nigeria Says This Exchange Enables Currency Manipulation by Criminals

2 mins
Updated by Ryan James
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In Brief

  • Nigeria is considering blocking Binance for creating a parallel forex market that criminals are using to weaken the naira.
  • The move comes after the Association of Bureaux de Change Operators called for a shut down of the parallel market in 2023.
  • The Nigerian president recently appointed a new cabinet to solve problems of different exchange rates in parallel markets.
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Nigeria looks to block Binance’s peer-to-peer (P2P) exchange because criminal transactions on the platform have allegedly hurt the naira. The move comes after the central bank introduced a new official exchange rate to encourage foreign investment.

Nigeria is considering blocking Binance and other crypto exchanges for alleged foreign exchange market manipulation.

Nigeria Accuses Binance of Enabling Crime

The Nigerian presidency and regulators accuse crypto exchange Binance of allowing speculators and money launderers to commit crimes. The government says criminals also use the platform for ransomware crimes. These crimes are reportedly weakening the naira.

The allegations follow a plea by the Association of Bureaux de Change Operators for the government to ban Binance to stop its parallel forex market. The Nigerian Securities and Exchange Commission later censored Binance in September 2023. In a disclaimer, the SEC said the platform’s operations in Nigeria were illegal

The ban, however, has not discouraged crypto adoption. Triple-A says about $13 million out of $224 million Nigerian citizens hold cryptocurrency. Crypto provides financial inclusion and protection against a weakening currency.

Read more: How to Protect Yourself From Inflation Using Cryptocurrency

Naira Devaluation Against US Dollar | Source: Bloomberg

Nigeria’s new president, Bola Tinubu, who took over in May, appointed a new cabinet in August. The new finance minister, Wale Edun, was tasked with making Nigeria an attractive destination for investors.

How Fiscal Policy Weakened Naira

The Central Bank of Nigeria’s monetary policy has complicated evaluations of the Naira’s strength. A limited number of US dollars in its reserves has created alternate forex markets. Therefore, the value of its fiat currency varies.

Recently, the central bank changed the exchange rate calculation to bring it closer to the black market rate. According to Charlie Robertson of asset management firm FIM Partners, the lower exchange rate could attract foreign investment into the country. 

“It could take months but there could be more dollars swirling around in Nigeria now that the currency is officially very cheap,” Robertson said.

The central bank proposed new crypto regulations in December. It is also reportedly investigating the launch of the cNGN, a naira-based stablecoin.

Read more: Crypto Regulation: What Are the Benefits and Drawbacks?

However, the central bank did not say when the new rules will be enforced. BeInCrypto contacted Binance for comment but had not heard back at press time.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...