The Nigerian government has detained two executives of the Binance crypto exchange platform. This action aligns with their efforts to stabilise the nation’s foreign exchange market and protect the value of its currency, the Naira.
Informed sources indicate the executives were detained in the capital, Abuja, following their arrival to negotiate with authorities amidst a government crackdown on cryptocurrency platforms. The government had previously blocked the online platforms of Binance and other crypto firms, citing concerns over manipulation of the forex market and illicit movements of funds.
Presidency and regulatory sources state the move against Binance and similar firms was prompted by reports of currency speculators and money launderers exploiting these platforms for criminal activities. Authorities suspect these activities are a significant factor in weakening the Naira.
Binance offers a platform for peer-to-peer transactions where users can advertise their interest in buying or selling various currencies.
It’s worth noting that in September 2023, the Nigerian Securities and Exchange Commission (SEC) issued a statement disavowing Binance Nigeria Limited, asserting that the platform was unregistered and operating illegally within Nigeria. However, Binance continued to attract patronage, particularly among younger demographics, speculators, and suspected money launderers. Aside from economic concerns, officials also cite national security risks due to the platform’s use by criminal groups, including for ransom payments.
Binance previously stated that they remove users engaging in manipulative behaviour from their platform and work with local authorities to address non-compliance. They have also implemented measures to counter market manipulation.
Details indicate the two detained Binance executives met with top cybersecurity officials and investigators as part of negotiations. However, these meetings failed to reach a resolution as Binance officials declined to meet certain demands put forward by the Nigerian government, including accusations of operating a multi-billion dollar business without proper registrations.
Nigerian officials requested that Binance provide transaction data related to the Nigerian Naira over the past seven years, along with the deletion of other Nigeria-specific data from the Binance platform. The executives maintained that they should be taken to their respective embassies before complying.
While the identities of the executives are not fully disclosed, one is reportedly American and the other British-Pakistani. The Nigerian government has secured a court warrant to detain them for an initial period of twelve days.
The investigation has been taken over by the Economic and Financial Crimes Commission (EFCC), with the executives detained at a location near the Office of the National Security Adviser. The EFCC has not issued any statement on the matter.
Binance has reportedly disabled its peer-to-peer (P2P) function for Nigerian users, raising questions about Nigerians’ ability to trade on the platform going forward. Binance officials have yet to respond to inquiries on this development.
The Central Bank of Nigeria has claimed that $26 billion from “unidentified sources” flowed through Binance Nigeria over the past year, further highlighting the government’s concerns.
