Nigerian government wants Binance to pay $10 billion fine amid crypto crackdown in the country

The government of Nigeria is demanding that Binance pays a $10 billion fine after investigations revealed that the crypto exchange manipulated foreign exchange rates through currency speculation and rate-fixing.

As a consequence the Naira (Nigeria’s currency) lost about 70% of its value. It’s currently trading at 1,595 naira for $1, compared to about 460 naira for $1 a year ago.

A section of the population will want to blame President Bola Tinubu for the events as he was responsible for scrapping the policy of pegging the naira to the dollar.

Consequently, traders could buy and sell the currency at rates determined by the market.

However, an advisor to the president has said that the events being witnessed are not normal market conditions and hence the decision to investigate Binance.

"All of a sudden the exchange rate went through the roof... and it was being caused by the people on Binance platform," he told the BBC Newsday programme.

"The government could not just fold its hands and allow this thing to continue."

Nigeria is one of the world’s biggest cryptocurrency markets with a recent report revealing that cryptocurrency transactions equivalent to about 12% of Nigeria's total income, or GDP, took place in the year to June 2023.

Nigeria's central bank governor Olayemi Cardoso further revealed that Binance Nigeria had moved $26bn worth of untraceable funds.

This further complicates the matter as authorities in the country believe that the platform is being used as conduit for money laundering schemes and terrorism funding.

The "anonymity and privacy inherent in the cryptocurrency system are what draw individuals, particularly those with illicit intentions, towards its use," said a recent report by the Nigerian Financial Intelligence Unit.

Following these recent events, Binance and other crypto exchange platforms including Coinbase, Kraken, Forextime, OctaFX, Crypto and FXTM have been suspended in the country.

The government has also ordered the closure of thousands of bureaux de change as it looks to curb the decline of the local currency.

Still, the government has said that cryptocurrencies are not illegal in the country, but firms must register in order to operate there.