Tuesday, April 23, 2024
Blockchain

Nigeria Seeks $10 Billion in Damages from Binance

Nigerian government demands $10 billion from Binance, alleging cryptocurrency exchange’s activities have adversely affected the Naira and the country’s economy.

The Nigerian government is seeking a staggering $10 billion in damages from the world’s largest cryptocurrency exchange platform, Binance, over accusations that its activities have significantly destabilized the country’s economy, according to BBC.

The claim centers around allegations that Binance has been a key player in manipulating the exchange rates, contributing to the Naira’s nearly 70% devaluation in recent months. Bayo Onanuga, a spokesperson for President Bola Tinubu, emphasized the detrimental impact of Binance’s operations on Nigeria’s attempts to stabilize its economy.

According to Onanuga, “The platform is fixing the exchange rate in the country at an illegal rate. The CBN (Central Bank of Nigeria) is the only authority that can set exchange rates in the country.”

Furthermore, security agencies have detained two foreign executives of Binance as part of an ongoing investigation into the platform’s alleged involvement in money laundering and terrorism financing.

The Central Bank of Nigeria Governor Olayemi Cardoso disclosed that approximately $26 billion has been transacted through Binance Nigeria in cryptocurrency trades, many of which stemmed from “sources and users we cannot adequately identify,” underscoring the regulatory challenges posed by cryptocurrencies.

The Nigerian authorities assert that, contrary to the country’s laws, Binance and other cryptocurrency companies have been operating without proper registration. Even after the CBN lifted a ban on cryptocurrency in 2023, compliance with registration requirements under the Security Exchange Commission (SEC) remained a contentious issue.

Binance has since removed Naira transactions from its platforms as part of its cooperation with the government. Onanuga noted that the government’s demands are not excessive given the rapid and severe economic disruptions attributed to Binance’s activities.

As the investigation proceeds, details on the duration it will take and the nature of discussions between the Nigerian government and Binance remain undisclosed. The situation has sparked broader discussions on the regulation of cryptocurrency exchanges and the impact of decentralized financial platforms on national economies.

This case has far-reaching implications for the crypto industry, especially in terms of regulatory compliance and the relationship between digital currency platforms and sovereign monetary policies. It also raises critical questions about the balance between innovation in the financial sector and the need for governments to safeguard their economies.

Image source: Shutterstock

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