Nigeria has arrested two top executives of Binance, the world’s largest cryptocurrency exchange, as part of its efforts to protect the naira currency from speculation and devaluation. The arrests come amid a renewed crackdown on crypto platforms in Africa’s biggest economy, which has been facing a foreign exchange crisis.

The executives, who flew to Nigeria after the country banned several crypto trading websites last week, were detained by the office of the national security adviser and their passports seized, according to a report by Reuters. The authorities accused Binance of facilitating illicit and suspicious flows of funds through its platform, and demanded to see a list of its Nigerian users since its inception.

The crackdown follows a period of high demand for cryptocurrencies in Nigeria, as many people use them as a hedge against inflation and currency depreciation, as well as a means of remittance and payment. The naira has been trading at record lows against the dollar, as the country struggles with low oil prices, COVID-19 pandemic, and security challenges.

Nigeria’s central bank governor, Olayemi Cardoso, said that Binance alone had processed $26 billion worth of untraceable funds in 2023, from sources and users who could not be adequately identified. He said that the central bank was concerned about the impact of these flows on the stability of the naira and the economy.

“We are not against innovation, but we have to ensure that our financial system is not used for illicit activities that undermine our national security and economic well-being,” Cardoso said.

He added that the central bank was working with various government agencies and the police to investigate these fund flows further, and to enforce the existing regulations on crypto transactions. He also said that the central bank was exploring the possibility of issuing its own digital currency, which would be more transparent and accountable.

Binance, which is based in the Cayman Islands and has no physical headquarters, said that it was cooperating with the Nigerian authorities, and that it respected the local laws and regulations. It also said that it was committed to providing safe and compliant services to its Nigerian customers, who make up one of its largest markets in Africa.

Binance, which was founded in 2017, is the world’s biggest crypto exchange by trading volume, offering hundreds of digital coins and tokens for trading. It has also expanded into other services, such as lending, staking, and education. It operates in more than 180 countries and regions, and has more than 15 million users.

Nigeria, which has a population of over 200 million people, is one of the most active and vibrant crypto markets in the world. According to a report by Chainalysis, a blockchain research firm, Nigeria ranked third in the world in terms of crypto adoption in 2023, behind Vietnam and India.

The people of Nigeria hope that the government and the crypto industry will find a common ground, and that the benefits of innovation and inclusion will outweigh the risks and challenges.

Source: Business Day