Nigerian crypto investors panic over Binance exit
The suspension of naira to dollar exchange services by Binance has caused fear among Nigerian cryptocurrency investors, whose funds may be trapped, writes JUSTICE OKAMGBA
Last week Tuesday, the crypto exchange announced that it would stop supporting withdrawals after Friday and that any remaining balances in the Nigerian currency would be automatically converted into Tether, a stablecoin whose value is pegged to the United States dollar.
Binance wrote in a statement, “All spot trading pairs against the naira will be delisted on March 7 at 3:00 a.m. Open spot orders for these pairs will be automatically closed. Binance Convert, Binance P2P, the exchange’s Auto Invest feature, and Binance Pay will also cease support for the naira at various dates and times,” the statement added
This was a fallout of the dispute between Binance and Nigerian fiscal and monetary authorities, who had accused the platform of manipulating the country’s foreign exchange rate.
Binance’s exit has activated panic mode in Nigerian crypto investors, who have billions of investments on the crypto platform. Many traders were in fear that other digital asset service providers could follow suit, amplifying concerns about the overall stability and attractiveness of the Nigerian crypto landscape.
A crypto trader, Ozioma Okechukwu, told The PUNCH, “I am aware of other crypto exchange platforms operating in Nigeria but many of us have been used to Binance. No matter how you look at it, it is a big blow to the market.
The trader argued that the delisting of naira from Binance had raised questions about the potential actions of other major players in the market.
“Everybody knows how big Binance is because it is a global platform. Other players may have similar thoughts as Binance to call it a quit. You could see what they have been through with the Nigerian government,” Omechukwu asserted
Binance has recently come under the scrutiny of the Federal Government, facing allegations of money laundering, illegal operations, financial terrorism, and tax evasion, among other concerns.
The Central Bank of Nigeria Governor, Olayemi Cardoso, stated during the Monetary Policy Committee meeting that $26bn that passed through Binance was not adequately identified.
The governor disclosed that it was collaborating with government agencies, including the Securities and Exchange Commission, the Economic and Financial Crimes Commission, the police, and the Office of the National Security Adviser, to crack down on illicit financial activities.
Last week, Nigerian authorities took action by detaining two senior Binance executives on undisclosed charges as part of a broader crackdown on the platform.
According to a cryptocurrency investment analyst, Sam Egwurube, Binance’s exit will disrupt usual operations on the platform.
In a note sighted by The PUNCH, the analyst stated, “The most important being that you can no longer bring in naira or use naira to purchase crypto on the Binance platform. All channels are terminated.
“If you already have naira, it will be converted to stablecoins automatically and you’ll need other means outside of Binance to convert or sell the stablecoin back to naira.”
The crypto analyst pointed out that despite Binance’s discontinuation of naira-related transactions, all other activities, products, and services provided by Binance remained accessible to Nigerians.
According to Egwurube, these services include spot and futures trading, Coin M trading, auto investing, staking, and launch pool, among others.
Egwurube encouraged individuals to find inspiration in the recently approved Bitcoin Spot ETF, reinforcing optimism and confidence in the evolving landscape of the cryptocurrency industry.
Exchange rate manipulation
The CEO of Midlands Advisory, Tijani Aliyu, expressed concerns about Binance potentially influencing the exchange rate of the naira to the dollar.
According to Aliyu, despite Binance’s contribution to financial inclusion, there were concerns about its impact on the Nigerian economy.
“There is a lot of manipulating the naira exchange rate, Binance’s peer-to-peer platform allows users to set inflated exchange rates, leading to a weaker naira.
“There is also some lack of clear regulatory frameworks for cryptocurrency exchanges in Nigeria and Binance operates here with minimal oversight,” he told The PUNCH.
The Midlands Advisory CEO claimed that the firm generated over $30bn in revenue at the expense of the country’s economic growth.
He said, “No tax, no income, no subsidy for the government, nothing. So, why should we still have them ripping off the economy to enrich the Western world?
“One could argue how they have brought about financial inclusion, job creation, and economic growth, and the big question is, how much they have made? Juxtapose that with what they are giving back to the economy,” Aliyu argued.
On August 8, 2023, the Association of Bureau de Change Operators of Nigeria called for the cessation of Binance operations in the country, citing concerns that the platform contributed to the pressure on the naira.
