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Binance Execs Detained in Nigeria Over $26 Billion in Illicit Out Flows

Last Updated March 1, 2024 1:36 PM
Eddie Mitchell
Last Updated March 1, 2024 1:36 PM
Key Takeaways
  • Two senior Binance executives have been detained in Nigeria amid a cryptocurrency exchange crackdown.
  • Binance Nigeria is under scrutiny for allegedly processing billions in illicit funds.
  • Crypto exchanges stand accused of manipulating the country’s currency.

Reports have emerged  that Nigeria’s office of the National Security Adviser (NSA) has detained and seized the passports of two Binance execs in the capital of Abuja. No further details regarding the arrests have been made at this point.

The news comes as officials in Nigeria are probing Binance Nigeria for allegedly processing $26 billion of potentially illicit funds last year. Furthermore, numerous major crypto exchanges have had their sites and telecommunications blocked in the country amid accusations of manipulating the nation’s fiat currency, so what’s going on?

Binance Execs Detained

The world’s leading exchange has found itself in hot water again as two senior executives have been detained just a day after landing in the country. As per local media , the pair were set to begin negotiations with Nigerian authorities amid a broad clampdown on crypto exchanges, as well as some scrutiny specific to Binance.

According to the governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, crypto exchanges are being examined with a great deal of suspicion, telling reporters :

“We are concerned that certain practices go on that indicate illicit flows going through a number of these entities, suspicious flows at best,”

More specifically, the CBM head highlights that Binance processed $26 billion in funds from sources that they could not “adequately identify”, as a result, there is now a major collaboration between the nation’s Economic and Financial Crimes Commission (EFCC), the NSA, and the police.

Though this investigation may partly explain why the British and American Binance execs were detained and had their passports confiscated, the swift nature of the arrest has concerning implications.

Nigerian officials are yet to clarify if the duo has been charged with any violations of Nigerian law, and there is no official statement from Binance at the time of writing.

Crypto Regulation in Nigeria

The CBN lifted a two-year ban on banks interacting with crypto in December 2023 as the absence of regulations can create even greater risks for consumers and governments. That said, the lifting of the ban came with some rather strict guidelines  on how to regulate the digital asset market within Nigeria.

Crypto Guidelines
Nigerian authorities outline crypto regulation reasoning.

More specifically, banks were still banned from “still prohibited from holding, trading and/or transacting in virtual currencies on their own account”, with restrictions on opening accounts for any entity looking to conduct crypto/digital asset business, though this comes with certain exceptions.

The new rules only allow for Nigerian Naria-based accounts to be opened should they comply with the guidelines and will only be used for digital asset transactions “and not for any other purpose.”

It bans cash withdrawals from the account and only allows for the settlement/withdrawal of crypto asset-related transactions to be performed through a designated account and process, amongst other conditions.

Exchanges Accused of Manipulation

Their detainment comes just days after Nigeria’s telecoms regulator ordered companies to block access to crypto exchanges such as Coinbase, Binance, and Kraken, due to concerns that they were undermining and manipulating the national currency, the Nigerian Naira.

Bayo Onanuga, information and strategy advisor to President Bola Tinubu, outlined his concerns in a thread where he alleged that crypto platforms had manipulated the country’s fiat currency.

According to Onanuga, by setting caps and altering the selling price of the U.S. dollar token, Tether (USDT), for the Naira equivalent on their platform, crypto exchanges are effectively contributing to the nation’s declining economy.

Binance responded , noting that these recent restrictions on USDT came as the result of “a temporary suppression of prices that briefly reached the system limit”, which they said is automated by their system “in the event of a period of significant currency movement.”

Binance in Focus

In his thread, Onanuga brings his focus to Binance, whom he accuses of “blatantly setting exchange rate for Nigeria, hijacking CBN role,” and highlights the many regulatory troubles the platform is in across multiple major jurisdictions such as the UK, U.S., Singapore, and Canada.

He notes that despite international troubles, Binance continues to conduct business. Apart from the accusations of manipulating the Nigerian economy, the Nigerian government’s concerns are not unfounded, considering that Binance pleaded guilty to many charges in the U.S., including ones relating to unlicensed money transmitting and anti-money laundering (AML) in November 2023.

What this means for the status of the Binance execs currently detained in Nigeria is up for speculation, but with former Binance CEO Changpeng “CZ” Zhao set to have his criminal sentencing on April 30, 2024, things aren’t looking great for the world’s most popular crypto exchange.

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