Binance Drops Naira From P2P Platform After Manipulation Fears

Crypto exchange Binance has removed Nigeria’s fiat currency, Naira, from the national currencies it supports on its peer-to-peer (P2P) platform.

Meanwhile, the Financial Times reported that two Binance executives have been detained in the country, with their passports seized. The Binance employees had traveled to Nigeria to resolve the country’s ban on crypto exchange websites.

Nigeria has the highest peer-to-peer volume in the world due to the high level of adoption in the country. The development comes amid increasing regulatory concerns about Binance’s role in Nigeria’s foreign exchange challenges.

P2P exchange rate concerns

Last week, the Nigerian government restricted access to the online platforms of various crypto firms, including Binance. The regulators argued that this would prevent what they perceived as ongoing manipulation of the foreign exchange market and the unlawful movement of funds.

However, as is well known in the crypto industry, the exchange rates on P2P markets are not controlled by crypto exchanges — rather, the rate is the price at which two individuals agree to trade their assets.

The “open-market exchange rate,” as it is often called, is determined by people participating in P2P markets involving unstable fiat currencies. The exchange rates often fluctuate heavily depending on market conditions and are usually above the interbank rate.

This is the first time a government has blamed crypto exchanges for the open market rates of their currency.

It’s worth noting that the Nigerian Securities and Exchange Commission (SEC) declared Binance’s operations illegal in 2023, citing its lack of registration in the country.

Unverified $26 billion transaction

Olayemi Cardoso, the governor of Nigeria’s Central Bank, recently told local media that Binance Nigeria allegedly facilitated the transfer of $26 billion from unidentified sources last year.

“We have a responsibility to protect Nigerians and are concerned about illicit flows. In 1 year $26 billion passed through Binance Nigeria from people we cannot identify,” Cardoso said.

“We will not allow our FX markets to be manipulated.”

The naira has lost around 70% of its value against the dollar since the currency’s widely-criticized peg was relaxed in June.

A presidential spokesman last week accused crypto trading platform Binance of manipulating the naira, posting on X that reports it had been blocked were correct.

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