Recently, Bayo Onanuga, a special adviser to Nigerian President Bola Tinubu, made serious allegations against Binance. He claimed that the cryptocurrency exchange was manipulating the exchange rate for Nigeria and essentially taking over the role of the Central Bank of Nigeria (CBN). Onanuga called for action from the Economic and Financial Crimes Commission (EFCC) and the CBN to prevent platforms like Binance from destabilizing the national currency. These accusations come in the midst of Binance’s peer-to-peer (P2P) platform being temporarily paused due to issues with trading USDT at certain prices.
Following the suspension of trading activities on Binance’s P2P platform, Nigerian users expressed their frustrations on social media. Many reported difficulties with selling USDT above a specific price, as the country’s fiat currency plummeted to record lows against the US dollar. In response to these challenges, some traders have shifted to alternative platforms like KuCoin and ByBit to continue trading stablecoins. Moreover, the former CEO of Paxful, Ray Youssef, recommended his new platform, noOnes, as a viable alternative for Nigerian users seeking to trade digital assets amidst the economic turmoil.
In recent years, Nigerians have increasingly turned to platforms like Binance to purchase digital assets as a hedge against inflation and currency devaluation. The Binance P2P platform has emerged as a critical venue for price discovery in the Nigerian foreign exchange market. Despite efforts by the Central Bank of Nigeria to stabilize the economy and currency, challenges persist due to speculative trading activities and forex speculation. While some stakeholders blame crypto exchanges for exacerbating the situation, others argue that the restrictions on foreign exchange access imposed by the CBN have contributed to the popularity of Bitcoin and other cryptocurrencies in Nigeria.
Binance has clarified that it is not a price discovery platform and that market forces determine prices on its platform. The exchange emphasized that its pricing is not meant to replace official currency pricing in Nigeria. Following the CBN’s ban on financial institutions from facilitating crypto trades in 2021, Nigeria has become one of the largest P2P markets globally. Despite the lifting of the ban and the introduction of stringent regulations, data from Binance indicates a significant level of trading activity in Nigeria, with the USDT/NGN trading pair alone recording trades worth millions of dollars in the past day.
Overall, the accusations against Binance, the challenges faced by Nigerian users, and the regulatory environment in Nigeria all contribute to a complex landscape for cryptocurrency trading in the country. As stakeholders continue to navigate these issues, the future of the cryptocurrency market in Nigeria remains uncertain.
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