Recently, a special adviser to Nigerian President Bola Tinubu, Bayo Onanuga, publicly accused Binance of manipulating exchange rates in Nigeria and taking over the role of the Central Bank of Nigeria (CBN). Onanuga’s statement on social media caused a stir in the Nigerian cryptocurrency community, with calls for regulatory action against platforms like Binance. The accusations stemmed from Binance’s peer-to-peer (P2P) platform for Nigerian users automatically pausing transactions due to reported difficulties in selling USDT above a specific price.
Following the temporary pause in trading activities on Binance, Nigerian users expressed frustration over the inability to trade USDT as the country’s fiat currency plummeted against the US dollar. This led to a surge in complaints on social media and a migration of users to alternative P2P platforms like KuCoin and ByBit. Ray Youssef, former CEO of Paxful, even recommended his new platform, noOnes, as an alternative for disgruntled traders.
The backdrop to these developments is Nigeria’s economic challenges, particularly the issue of forex speculation and inflation. The CBN has struggled to stabilize the economy and currency, with some blaming crypto exchanges for exacerbating the situation. Stakeholders like Bashir Ahmad and Femi Longe have differing views on the role of crypto trading in Nigeria, with Ahmad alleging that unauthorized platforms lead to exchange rate fluctuations and Longe pointing to CBN’s restrictive policies as a factor in the rise of crypto trading.
In response to the allegations, Binance clarified its position, stating that it does not set prices on its platform and that market forces determine the exchange rates. The exchange emphasized that it is not a price discovery platform and does not intend to replace official currency pricing in Nigeria. Despite the regulatory challenges, Nigeria has emerged as a significant P2P market for cryptocurrencies, with the USDT/NGN trading pair alone recording substantial trading volume.
The cryptocurrency controversy in Nigeria highlights the complex interplay between economic challenges, regulatory measures, and market dynamics. The allegations against Binance, user frustration, and differing views on the role of crypto trading underscore the need for a nuanced and comprehensive approach to address the issues at hand. Moving forward, regulatory authorities, industry stakeholders, and users must work together to ensure a fair and transparent cryptocurrency market in Nigeria.