Binance, the world’s leading cryptocurrency exchange platform, on Wednesday disabled the Naira pair on its Peer-to-Peer (P2P) platform shortly after Financial Times (FT) reported the arrest of two of the company’s executives.
The two executives reportedly flew into the country following the Federal Government’s decision to ban cryptocurrency exchanges to rein in speculation and curb currency manipulations.
However, the two were arrested by the authorities at the airport and their passports were confiscated pending investigation into Binance activities in Nigeria.
Binance which had sustained operations on its mobile application despite the ban imposed by the government on the organisation a week earlier and even released a statement to that effect suddenly disabled its Naira pair on Wednesday after FT broke the news of the arrest.
It should be recalled that Binance introduced the P2P service to beat the impact of sanctions on its operations after the Central Bank of Nigeria (CBN) restricted all financial institutions from facilitating cryptocurrency transactions in 2021.
This means that Binance disabled its Naira pair to curb capital outflow in the aftermath of the report and it is not in compliance with the Federal Government’s position as people are insinuating.
During the Monetary Policy Committee (MPC) press conference, Olayemi Cardoso, the Governor, CBN had heaped most of the woes of Nigeria’s currency on operations of Binance and other similar platforms.
According to him, a total of $26 billion was moved through Binance Nigeria in the last one year from both unknown sources and users.
He “We are concerned that certain practices go on that indicate illicit flows going through a number of these entities [crypto platforms] and suspicious flows at best. In the case of Binance, in the last one year alone, $26bn has passed through Binance Nigeria from sources and users who we cannot adequately identify”.
Therefore, the news of the arrest would have triggered an exodus outflow of capital to other cryptocurrency exchange platforms like Kucoin and dragged on Binance’s activity level at a time when activity was just picking up ahead of Bitcoin Halving and the subsequent bullish run.
Nigeria is by far the largest cryptocurrency market in Sub-Saharan Africa and between July 2022 and June 2023 received $60 billion in crypto value, according to Chainalysis.
“Nigeria is one of only six countries in the top 50 by size globally whose crypto transaction volume grew year-over-year in the time period we studied. Its growth rate of 9.0% places it third among those six.”