The Central Bank of Nigeria (CBN) has raised concerns about “suspicious flows” of funds through Binance Nigeria in 2023, signaling heightened scrutiny of the cryptocurrency exchange by Nigerian authorities. Olayemi Cardoso, the head of CBN, stated that there are suspicions regarding illicit activities involving certain crypto exchanges in Nigeria, including Binance. Cardoso revealed that an estimated $26 billion had passed through Nigeria via Binance in the past year from sources and users that cannot be adequately identified.
The Nigerian government, including the Securities and Exchange Commission, is reportedly collaborating with agencies such as the Economic and Financial Crimes Commission (EFCC) and the police to investigate these suspicious activities. Additionally, there are reports that two Binance executives, who hold citizenship from the United States and the United Kingdom, have had their passports confiscated by the office of the National Security Adviser (NSA) in Abuja.
Nigeria has recently implemented measures targeting crypto exchanges, including blocking internet access to platforms like Binance, Coinbase, and Kraken. These actions came after allegations of currency manipulation by crypto exchanges, leading to restrictions on Tether trading in Nigeria by Binance. The Nigerian naira has also experienced a significant decline against the U.S. dollar, exacerbating concerns about the country’s currency stability.
Despite lifting a two-year ban on banks engaging in crypto transactions in December, Nigeria has introduced guidelines for regulating virtual asset service providers. Furthermore, Nigeria became the second country to launch a central bank digital currency (CBDC) in 2022, with the introduction of the naira-pegged cNGN stablecoin by the Africa Stablecoin Consortium.
As of the publication of this article, Binance has not responded to requests for comment regarding the situation in Nigeria. The exchange’s operations in the country remain under scrutiny, with regulatory authorities closely monitoring its activities amidst concerns over illicit financial flows and currency stability.
The situation underscores the ongoing regulatory challenges facing crypto exchanges in Nigeria and the broader implications for the cryptocurrency industry in the country. As regulatory scrutiny intensifies, stakeholders will need to navigate a rapidly evolving landscape to ensure compliance while fostering innovation in the digital asset space.
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