The Federal Government is working on blocking the online platforms of Binance and other crypto firms, accusing them of continuous manipulation of the foreign exchange (forex) market and illicit funds movement leading to depreciation of the naira.
Naira continuous depreciation has made the authorities to think of viable ways to close loopholes through which the local currency is being undermined.
The naira yesterday exchanged at N1,880 to dollar at the parallel market and exchange at over N1,542 to dollar at the official market.
Presidency and regulatory sources say the government decided to move against Binance and other crypto firms following reports that currency speculators and money launderers were using them to execute criminal activities. Authorities believe the ‘criminal activities’ going on these platforms are contributing significantly to the weakening of the naira.
Binance, a digital assets platform, serves as a window for peer to peer transaction allowing users to advertise interest to sell or buy currencies of their choice.
This is as the Office of the National Security Adviser (ONSA) announced that it was joining forces with the Central Bank of Nigeria (CBN) to clamp down on currency speculators and economic saboteurs.
The Head of Strategic Communication at ONSA, Zakari Mijinyawa, hinted in in a statement that individuals and organisations involved in wrongful activities in Nigeria’s forex market would be identified, investigated and penalised.
In September 2023, Nigeria’s Securities and Exchange Commission (SEC) placed a disclaimer on Binance Nigeria Limited, saying the platform was “neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal”.
Despite the warning by the regulatory agency, the firm continued its operation, attracting huge patronage especially among urban youths and suspected speculators.
Aside suspicions of economic sabotage, officials also speak of national security concerns as the platforms are often patronised by other criminal groups including for payment of ransom.
Law enforcement sources say the digital asset platforms are also routinely deployed for manipulation of forex values through fake deals that serve to prop up values or cause a fall.
The activities of the crypto firms are seen as “sophisticated heist against the Nigerian economy”.
According to sources, by allowing simultaneous opening of buy and sell windows for a single user, manipulators often fake interest to sell dollars which they then buy at a speculated rate to themselves through the buy window.
This therefore gives the dollar a fake value against the naira which then sets a frenzy and mislead the market. This fake price is often quoted by BDCs who raise their prices to meet the Binance benchmark even without any corresponding demand in that segment.
A senior executive at the CBN described as “troubling” the bearish downward trade of the naira against the dollar in the last 10 days, attributing it to artificial devaluation caused by the speculative sites.
“Through manipulative rent seeking, Binance’s global reach results in higher USD to NGN exchange rates often being used as a benchmark for currency trading, misleadingly devaluing the Naira in global markets,” the CBN exec said.