It would be more useful for Nigeria to address the factors weakening the currency rather than focus on symptoms, said John Ashbourne, an emerging markets economist at Fitch Solutions in London. “The real cause of the depreciation is that more and more Nigerians are losing faith in the naira and prefer to keep their money in really any other currency, even a famously volatile crypto unit,” Ashbourne told Semafor Africa.
The arrest, first reported by the Financial Times on Wednesday, follows a move last week that saw telecom providers shut off user access to the websites of Binance, Coinbase and other crypto exchanges. Crypto platforms have been scaling down services in Nigeria in the period since. On Wednesday, Binance stopped offering peer-to-peer trades that allowed users to exchange the naira for USDT, a digital currency pegged to the U.S. dollar.
During a Tuesday briefing after hiking Nigeria’s interest rate to 22.75%, central bank governor Yemi Cardoso singled out Binance while detailing suspected manipulations of the naira on crypto platforms. “In the last one year alone, $26 billion has passed through Binance Nigeria from sources and users who we cannot adequately identify,” Cardoso said.
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In December, the central bank seemed ready to welcome crypto platforms into the financial system. It canceled a three-year order that barred banks from enabling crypto trades, laying the groundwork for a new license that companies started preparing to apply for. But Cardoso — a former Citigroup banker appointed to the central bank in September — has reverted to the view, held by his predecessor Godwin Emefiele, that crypto trading seriously undermines currency stability.
Nigeria faces soaring inflation at nearly 30% and a restive public bemoaning the rising cost of food and transportation. The central bank has pushed a flurry of tools targeting exchange rate and price stability in recent weeks. At the same time, government officials have put a lot of blame on companies like Binance, pointing to naira for USDT trades as encouraging undue demand for the dollar and undermining policymakers’ efforts.
“Currency traders told us they were acting on Binance’s rates,” one government official, who spoke on the condition of anonymity, told Semafor Africa. The official suggested that a move against Binance became necessary after the central bank’s attempt to close the gap between official and black market foreign exchange rates weakened after brief success.
Nigeria is pressing Binance for information on its top 100 users in the country, as well as all transaction history for the past six months, as its detention of two senior executives at the cryptocurrency exchange enters a third week.
The request is at the centre of negotiations between Binance and Nigeria, which sees the company as a crucial link undermining government efforts to stabilise its currency, the naira. The period under review is crucial because it tallies with the timeline of Nigeria’s devaluation of its currency.
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The two play a significant role in Binance’s Africa operations. Nadeem Anjarwalla, a UK citizen, is a regional manager for Africa at Binance. Tigran Gambaryan, a former US Internal Revenue Service special agent, is head of Binance’s financial crime compliance.
The two are being held at a guest house in Abuja adjacent to the national security adviser’s office, and both executives’ phones and passports were seized upon their detention, said people familiar with the matter. Binance was unable to contact them until March 5, a full week after their detention, one of the people added. Neither man has been charged with an offence.
One person briefed on the situation described the Binance executives as being held “simply as hostages” but said they were being well treated. Their status as citizens of two of Nigeria’s closest western allies and the desire to avoid a diplomatic incident is seen as a reason for this.
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Olayemi Cardoso, Nigeria’s central bank governor, said last month that $26bn had passed through Binance within the past year through sources we “cannot adequately identify.” He did not name the two executives.
When Nigeria removed its years-long currency peg last June, the central bank said the market would determine the value of the naira against the dollar. However, Bayo Onanuga, a special adviser to Tinubu, said last month that Binance had a “deleterious effect” on the Nigerian economy and accused the company of hijacking the central bank’s role as the exchange rate arbiter.
Onanuga said the two men were “co-operating” with Nigerian authorities and providing a “lot of information” and suggested that Nigeria may seek to impose a $10bn fine as “retribution” because they “really messed up” our economy. Sources say this is not a final fee and should be seen as the starting point in a negotiation.
This is the key, I think:
From the article:
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More:
Nigeria pushes Binance for user data in stand-off over naira speculation - Financial Times - archive
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