Binance, one of the world’s leading cryptocurrency exchanges, is currently under increased scrutiny in Nigeria, as announced by Olayemi Cardoso, the governor of the Central Bank of Nigeria (CBN), on February 27. The concern arises from “suspicious flows” of funds through Binance Nigeria, with the CBN and other regulatory bodies like the Securities and Exchange Commission closely monitoring the situation.
Governor Cardoso highlighted the issue of illicit financial flows as a major concern, pointing out that in the past year, a staggering $26 billion has been moved through Nigeria via Binance, from sources that remain largely unidentified. This situation has led to a collaborative effort among various Nigerian enforcement and regulatory agencies, including the Economic and Financial Crimes Commission (EFCC), the national police, and the office of the National Security Adviser (NSA), to address these concerns.
In a move that underscores the seriousness of these allegations, the NSA’s office has reportedly detained two Binance executives in Abuja, confiscating their passports. These executives are citizens of the United States and the United Kingdom, further internationalizing the issue.
The Nigerian government took a firm stance against cryptocurrency exchanges on February 21, blocking internet access to Binance and other platforms following accusations from presidential adviser Bayo Onanuga, who claimed these exchanges were manipulating the Nigerian currency. In response, Binance had already restricted trading of Tether in Nigeria on February 20, aiming to comply with regulatory demands.
The situation escalated on February 27, when Binance, along with other major cryptocurrency exchanges like Forextime, OctaFX, Crypto.com, FXTM, Coinbase, and Kraken, were blocked in Nigeria. This blockade coincided with the Nigerian naira reaching an all-time low against the U.S. dollar.
Despite these challenges, Nigeria had previously shown openness to digital currencies, becoming the second country to launch a central bank digital currency in 2022. Furthermore, the Africa Stablecoin Consortium introduced the naira-pegged cNGN stablecoin in a CBN-regulated sandbox earlier this month, indicating a nuanced approach to regulating digital assets while addressing concerns over illicit financial flows
