What you’ll learn
- Nigeria’s naira has experienced massive volatility against the US dollar.
- Crypto trading is being blamed for the naira’s decline and detractors accuse it of currency manipulation.
- Binance and other crypto exchanges offering services to Nigerians are at the centre of controversy.
The recent fluctuation of Nigeria’s fiat currency, the naira, against the US dollar has sparked accusations of currency manipulation and controversy surrounding crypto trading in the country.
As the naira reached an all-time low of 1,900 against the dollar on Wednesday, followed by a sudden rise to 1,358 mere hours later, it has lost 90% of its value in the last eight months.
Price manipulation and calls for a ban
Policymakers have pointed fingers at Binance, a popular crypto exchange in Nigeria, for enabling currency speculation and forex market manipulation.
However, Binance has denied these allegations, stating that foreign exchange rates are influenced by various complex factors beyond their control.
Nigeria’s anti-graft agency is reportedly investigating claims of coordinated efforts to manipulate the country’s forex market through crypto trading on Binance. This alleged manipulation involves creating fake buy and sell orders for the USDT-NGN trading pair on the exchange, which in turn affects the value of the naira against the US dollar in the market.
Additionally, Bureau de Change operators are said to be using Binance’s quotes for the USDT-NGN pair in their transactions with the public, despite the exchange’s spot trading volume for this pair being relatively low compared to the country’s official forex market.
Impact on Binance and potential ban
These accusations have caused speculation about a potential ban on crypto trading in Nigeria, with unconfirmed reports stating that the government has ordered internet service providers to block access to crypto trading websites.
Binance, being a popular platform for crypto trading in the country, has faced criticism and calls for a ban from some officials in the past. However, the exchange remains popular among Nigerian traders, especially among the younger generation.
Last year, blockchain forensics firm Chainalysis ranked Nigeria second in its global crypto adoption index, highlighting the country’s growing interest in the market.
While Binance has addressed the recent price manipulation accusations and made adjustments to allow trading to continue, the future of crypto trading in Nigeria remains uncertain as the government continues to take action against perceived currency manipulators.
Whether or not a ban on crypto trading will be implemented, it is clear that Nigeria’s government is closely watching the market and taking steps to address any issues that may arise.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at osato@dlnews.com.
