Having tried several monetary hacks to improve the Naira’s standing against the dollar with few recorded successes, the Nigerian authorities have now set their eyes on the world’s largest cryptocurrency exchange, Binance which has been accused of creating problems for the economy.

By allowing its customers to come on its platform to artificially fix the exchange rate, Binance might have directly or indirectly weakened Nigeria’s currency. And so for this reason, federal officials are seeking close to $10 billion from the 2017-founded crypto trader because they consider the company complicit in fostering a persistent inflation problem.

The Central Bank of Nigeria (CBN) , Mr Olayemi Cardoso at a two-day monetary policy committee meeting last month confirmed more than $26 billion have been funnelled through Binance without [a] trace, in the last year and that would not go unanswered.

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A retribution claim of around US$10 billion is something the authorities consider fair in finding a balance according to Bayo Onanuga, a special adviser to President Bola Tinubu. The aide was with the hosts of the BBC Newsday morning programme on Friday to discuss the government’s decision to seek retribution.

People were just coming there [on Binance] fixing the Nigeria exchange rate as if that is the legal rate. The CBN is the only authority that can fix the exchange rate of the country but on the platform, you find people who say they are sellers and they just arbitrarily fix the exchange rate.

This quickly affected the Nigerian economy at a time when the CBN was trying to stabilise the Nigerian currency, you have this destruction from the Binance platform.

The government could not just fold its arms and allow this to continue. Don’t forget that this year our budget is based on an exchange rate of ₦800 to one dollar but all of a sudden the thing went through the roof as if it was on a free fall and it was being caused by the people on the Binance platform. The people operating in the parallel market said if we don’t clamp down on Binance, the Naira is going to go into problem and that is why the government quickly moved in and invited them.

What we are simply asking for is that this country recorded massive losses from their operation. They allowed people to just go in there and fix the exchange rate arbitrarily as I said, and the government is not asking for small money from them.

We are asking them to pay us close to $10 billion in retribution because they really messed up our economy in [a] very short time allowing their platform to fix our exchange rate. BDCs were taking their cues from Binance, and that is very unfortunate.

We are dedicated to providing a market-driven platform for users, as well as working hand in hand with local authorities and regulators.

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— Binance Africa (@BinanceAfrica) February 20, 2024

Already, two Binance executives, one, an American and the other, a British-Pakistani, have been detained by the Nigerian authorities as part of measures to discourage further decline of the Naira in addition to stopping transactions connecting to the local currency.

The execs were reportedly arrested after they travelled to the federal capital territory to discuss the government’s ban on their company’s activities.

Ayodele Johnson

Ayodelé is a Lagos-based journalist and the Content and Editorial Coordinator at Meiza. All around the megacity, I am steering diverse lifestyle magazine audiences with ingenious hacks and insights that spur fast, informed decisions in their busy lives.