Recently, Bayo Onanuga, a special adviser to Nigerian President Bola Tinubu, launched a scathing attack against Binance, accusing the cryptocurrency exchange of manipulating exchange rates in Nigeria. He claimed that Binance was attempting to “hijack” the role of the Central Bank of Nigeria (CBN) and called for regulatory action to be taken against the platform. This accusation comes in the wake of Binance’s peer-to-peer (P2P) platform for Nigerian users being temporarily paused due to difficulties in trading USDT at a certain price point.
In response to the allegations, Binance acknowledged the issue with its P2P platform and described it as a “temporary suppression of prices.” The exchange promptly addressed the problem and resumed trading activities. Despite this, Nigerian users expressed frustration over the situation and turned to alternative platforms such as KuCoin and ByBit to continue trading stablecoins. Ray Youssef, former CEO of Paxful, even recommended his new platform, noOnes, as an alternative to Binance.
Over the years, Nigerians have increasingly turned to Binance to purchase digital assets as a way to protect themselves against inflation and currency devaluation. The Binance P2P platform has become a crucial venue for price discovery in Nigeria’s foreign exchange market. However, the Central Bank of Nigeria (CBN) has raised concerns about the impact of speculative trading on the economy, attributing it to the destabilization of the financial system. Former presidential aide Bashir Ahmad also pointed to crypto exchanges as exacerbating the situation by leading to fluctuations in exchange rates.
Despite the accusations leveled against it, Binance clarified that it does not set prices on its platform. The exchange emphasized that market forces determine prices and that its platform is not intended to serve as an official currency pricing mechanism in Nigeria. It is important to note that Nigeria emerged as one of the largest P2P markets in the world after the CBN banned financial institutions from facilitating crypto trades in 2021. While the ban was lifted the following year with strict regulations imposed, Binance continues to see significant trading activity in Nigeria, with the USDT/NGN trading pair alone accounting for trades worth billions of Naira.
The situation between Binance and Nigerian authorities highlights the growing importance of cryptocurrency exchanges in the country’s economy. While Binance has played a significant role in providing access to digital assets for Nigerians, the regulatory environment remains complex and contentious. Moving forward, it will be crucial for all stakeholders to engage in constructive dialogue to address the challenges and opportunities presented by cryptocurrency trading in Nigeria.
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