Per THISDAY, Nigeria’s Securities and Exchange Commission (SEC) may impose massive fines amounting to billions of dollars on big crypto giant, Binance, and other cryptocurrency firms operating in the country.
Along with other security agencies, SEC is presently looking into claims that cryptocurrency companies manipulated the value of the Naira without any supporting transactions. This development is believed to have contributed to the nation’s current FX liquidity problem.
The US government has already imposed sanctions on Binance for its serial currency manipulation in the past.
The company reportedly stopped operations and prevented users from purchasing USDT and USDC stablecoins with Naira on Wednesday in response to the federal government’s crackdown. This was due to new investigations conducted by the Central Bank of Nigeria (CBN) in coordination with security authorities.
Two Binance executives, an American and a British-Pakistani, were arrested by security personnel after accepting an invitation to meet with representatives from the Office of the National Security Adviser (NSA), according to a report by the Financial Times.
According to the UK-based news agency, two senior exchange officials who had just arrived in the country were detained and their passports were seized.
Further inquiries revealed that the NSA had asked the Binance executives to provide information regarding their seven-year-old naira operations during their questioning.
The management of Binance reportedly turned down a request from the federal government to remove information about naira from their site.
Additionally, it was stated that the federal authorities may have secured a court order to hold both Binance executives for a minimum of 12 days in order to enable additional investigation into their alleged corrupt activities within the country and identify any accomplices.
The crackdown on Binance followed investigations into the nation’s foreign exchange market, which over the years has been fraught with distortion’s, speculations, and manipulation, causing the steady fall of the naira below major currencies, especially the US dollar, in recent years.
CBN Governor, Mr. Olayemi Cardoso, speaking at a meeting of the Monetary Policy Committee (MPC), justified the apex bank’s clampdown on cryptocurrency platforms, particularly Binance, which, according to him, enabled its platform to be used for speculative activities against the naira.
According to Cardoso, anonymous users accessed $26 billion on the platform in 2023, which has all the consequences for monetary policy—particularly the propensity to fuel inflation and weaken the naira.
The Governor further added that there were signs of suspicious transactional and illegal inflows, and that it is the duty of CBN to protect Nigerians from the disruptive actions of these crypto platforms.
Cardoso declared that in order to take action against alleged economic saboteurs, the central bank is collaborating with other organisations such as the Office of the NSA, the police, and the Economic and Financial Crimes Commission (EFCC).
He said, “We are concerned that certain practices go on that indicate illicit flows going through a number of these entities and suspicious flows.
“In the case of Binance, in the last year alone, $26 billion has passed through Binance Nigeria from sources and users who we cannot adequately identify.
“There is a lot that is going on now as a result of collaboration between the different agencies, which includes the EFCC and the police, and, of course, the Office of the NSA and in due course, as we progress and have more information to share, we will certainly share but suffice to say that we are determined to do everything it takes to ensure that we take charge of our market and do not allow others to manipulate our markets in a way that ends up distortionary.
“We will not accept it. And we will do everything possible to prevent any of these kinds of infractions from taking place.”
So far, two crypto firms have informed customers of the recent development. A notification by one of the platforms read, “We are suspending the buying and selling of USDT and USDC for naira. This means you can’t buy or sell USDT or USDC with naira.”
Experts have raised fears that the crackdown could send mixed signals and further erode their trust in the Nigerian economy.
