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Kofoworola Odozi In a bid to tackle the ongoing forex crisis and curb what it perceives as the manipulation of the forex market and illicit movement of funds, the Nigerian government is contemplating blocking online platforms of Binance and other cryptocurrency firms, according to officials familiar with the policy option.
The Nigerian currency, the naira, has recently experienced unprecedented weakening, reaching an all-time low of N1,800 to a dollar in the parallel market. This alarming depreciation has prompted concerns within the government about the role of cryptocurrency platforms in exacerbating the situation.
Authorities allege that currency speculators and money launderers are exploiting platforms like Binance for illicit activities, contributing significantly to the weakening of the naira. Despite warnings from regulatory agencies, including the Securities and Exchange Commission (SEC), these platforms continue to operate, attracting substantial patronage, particularly among urban youths and suspected speculators and money launderers.
Law enforcement sources point to national security concerns, noting that these platforms are also used by criminal groups for activities such as ransom payments. Additionally, they highlight the role of these platforms in manipulating forex values through fake deals, artificially propping up or devaluing currencies.
A senior executive at the Central Bank of Nigeria (CBN) expressed concern over the artificial devaluation of the naira, attributing it to manipulative practices facilitated by platforms like Binance. He described the situation as “troubling” and emphasized the need for decisive action to safeguard the country’s economic stability.
Binance, the world’s largest cryptocurrency trading platform, has faced similar accusations in other countries, leading to sanctions and legal challenges. If Nigeria decides to ban these platforms, it would follow in the footsteps of countries like Malaysia, France, and Malta.
The Office of the National Security Adviser (ONSA) has announced its collaboration with the CBN to clamp down on currency speculators and economic saboteurs. This joint effort aims to identify, investigate, and penalize individuals and organizations involved in wrongful activities in Nigeria’s forex market.
In response to these developments, Binance has confirmed its cooperation with Nigerian authorities to address compliance issues. The platform has implemented measures to combat manipulative behavior, including setting upper limits for ads, filtering and removing bad ads, and taking action against market manipulators.
However, the move by Binance to restrict certain functionalities for Nigerian users has sparked criticism from some quarters. Users argue that these restrictions will not address the underlying issues and may lead to users seeking alternative platforms for their trading needs.
With Nigeria ranking among the countries with the largest population of crypto traders, the government’s actions could have significant implications for the cryptocurrency market and the broader economy. As discussions continue, stakeholders are closely monitoring the situation, mindful of the need to strike a balance between regulatory oversight and innovation in the digital asset space.
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